The manager at East Coast Manufacturing organizes costs to p

The manager at East Coast Manufacturing organizes costs to prepare the Costs of Quality report. The manger compiled the following data Employee training Warranty costs Rework Product testing Cost of rejected units Sales return processing costs Lost profits from lost sales Inspection at State l of Production Preventative maintenance Improved equipment $168,000 $205,000 $262,000 $190,000 $20,000 $55,000 $770,000 $100,000 $105,000 $145,000 O A. $675,000 B. $282,000 O C. $262,000 OD. $190,000 OE, $205,000

Solution

The correct option : b. $ 282,000 The internal failure cost category would include the cost of rework and the cost of rejected units. Hence total cost in this category = $(262,000 + 20,000) = $ 282,000.