Golf courses are demanding in their quest for high-quality carts because of the critical need for lawn maintenance. Antaris Co. manufactures golf carts and is a recognized leader in the industry for quality products. In recent months, company managers have become more interested in trying to quantify the company’s cost of quality. As an initial effort, the company identified the following 2010 costs by categories that are associated with quality:

Prevention Costs_____________________________

Quality training ..........$ 30,000

Quality technology ......... 100,000

Quality circles ........... 64,000

Appraisal Costs_____________________________

Quality inspections ..........$ 36,000

Test equipment ........... 28,000

Procedure verifications ........ 18,000

Internal Failure Costs________________________

Scrap and waste ...........$ 13,000

Waste disposal ........... 4,200

External Failure Costs________________________

Warranty handling ..........$ 19,000

Customer reimbursements/returns .... 15,200

Managers were also aware that in 2010, 500 of the 16,000 carts produced had to be sold as seconds. These 500 carts were sold for $160 less profit per unit than "good" carts.

Also, the company incurred rework costs amounting to $12,000 to sell 400 other carts through regular market channels.

a. Using these data, calculate Antaris Co.'s 2010 expense for the following:

1. Lost profit from the 500 units

2. Total failure cost

3. Total quality cost

b. Assume that the company is considering expanding its existing five-year warranty to a seven-year warranty in 2011. How would such a change be reflected in quality costs?