Chapter 19, Problem 14SE

Stegall, Inc. manufactures motor scooters. For each of the following examples of quality costs, indicate which of the following quality cost categories each example represents: prevention costs, appraisal costs, internal failure costs, or external failure costs.

1. 1. Preventive maintenance on machinery
2. 2. Direct materials, direct labor, and manufacturing overhead incurred to rework a defective scooter that is detected in-house through inspection
3. 3. Lost profits from lost sales if the company’s reputation is hurt because customers previously purchased a poor-quality scooter
4. 4. Cost of inspecting raw materials, such as chassis and wheels
5. 5. Working with suppliers to achieve on-time delivery of defect-free raw materials
6. 6. Cost of warranty repairs on a scooter that malfunctions at a customer’s location
7. 7. Costs of testing durability of vinyl
8. 8. Cost to reinspect reworked scooters