5.M:4-14 Matching cost-of-quality examples to categories
Stegal, Inc. manufactures motor scooters. For each of the following examples of qual-
ity costs, indicate which of the following quality cost categories each example repre
sents: prevention costs, appraisal costs, internal failure costs, or external failure costs.
1. Preventive maintenance on machinery
2. Direct materials, direct labor, and manufacturing overhead incurred to rework a
defective scooter that is detected in-house through inspection
3. Lost profits from lost sales if the company's reputation is hurt because customers
previously purchased a poor-quality scooter
4. Cost of inspecting raw materials, such as chassis and wheels
5. Working with suppliers to achieve on-time delivery of defect-free raw materials
6. Cost of warranty repairs on a scooter that malfunctions at a customer's location
7. Costs of testing durability of vinyl
8. Cost to reinspect reworked scooters
Learning
