Classify these items into prevention costs appraisal costs

Question

Problem A Here are cost items from Huskie Company's accounts for a typical month:

Inspection at the end of the production process	$80,000
Cost of returned goods	36,000
Design work to improve the way products are	48,000
made
Repairs to satisfy customer complaints	20,000
Employee training	24,000
Incoming materials inspection	20,000
Scrap	36,000

1. Classify these items into prevention costs, appraisal costs, internal failure costs, and external failure costs.

2. Suppose Huskie Company could spend an additional USD 40,000 per month on design work to improve the way products are made, and thereby reduce internal failure and external failure costs by 30 per cent each per month. (Appraisal costs would not be affected.) Would this be a wise thing for Huskie Company to do?

3. Give two examples of additional nonfinancial quality measures that Huskie Company could use to help improve quality. (Hint: See Exhibit 16.)