Matching cost-of-quality examples to categoriesSammy, 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.Preventive maintenance on machineryDirect materials, direct labor, and manufacturing overhead incurred to rework a defective scooter that is detected in-house through inspectionLost profits from lost sales if the company’s reputation is hurt because customers previously purchased a poor-quality scooterCost of inspecting raw materials, such as chassis and wheels Working with suppliers to achieve on-time delivery of defect-free raw materialsCost of warranty repairs on a scooter that malfunctions at a customer’s locationCosts of testing durability of the vinylCost to reinspect reworked scooters

Prevention costs denote the cost of resources consumed in activities that prevents defects from its…

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 1TIF: Ethics in Action The controller of Tri Con Global Systems Inc. has developed a new costing system...

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Matching cost-of-quality examples to categories

Sammy, 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.

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

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