Sara’s Stylish Suppers prepares food for wholesale to gourmet restaurants. Quality is very important to consumers of gourmet food. Following is a list of costs that Sara incurred during 2012:
Wages paid during downtime to fix machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,000
Cost of spoiled raw materials (cheese, meat, etc.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000
Training cost for new food handlers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Wages paid to food samplers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Lawsuit settlements for severe food poisoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Cost of refrigerator used to keep food fresh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Wages paid to quality inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Wages paid to chefs who create new gourmet dishes . . . . . . . . . . . . . . . . . . . . . . . . . . 97,000
Wages paid for redoing poor quality food (found before delivery). . . . . . . . . . . . . . . . 39,000
In addition, Sara’s accountants estimated approximately $100,000 in lost sales due to restaurant managers who are unhappy with Sara’s products and service. Compute the total cost for each of the following categories:
1. Prevention costs
2. Appraisal costs
3. Internal failure costs
4. External failure costs