1. Classify the activities into prevention, appraisal, internal failure, external failure, and not costs of quality (producing product). Classify the activities into value-added and non-value added activities.

Activity	Activity Cost		Cost of Quality Classification	VA/NVA
Correcting invoice errors	$13,650		External failure	Non-value-added
Disposing of incoming materials with poor quality	10,920		Internal failure	Non-value-added
Disposing of scrap	35,490		Internal failure	Non-value-added
Expediting late production	30,030		Internal failure	Non-value-added
Final inspection	19,110		Appraisal	Value-added
Inspecting incoming materials	5,460		Appraisal	Value-added
Inspecting work in process	24,570		Appraisal	Value-added
Preventive machine maintenance	19,110		Prevention	Value-added
Producing product	98,280		Not a quality cost	Value-added
Responding to customer quality complaints	16,380		External failure	Non-value-added
Total	$273,000

2. On paper or in a spreadsheet program, prepare a Pareto chart for each of the activities listed above. Answer the following:

What type of chart is a Pareto chart? Bar chart

Which activity appears first, in order from left to right? Producing product

3. Use the activity cost information to determine the percentages of total department costs that are prevention, appraisal, internal failure, external failure, and not costs of quality. If required, round percentages to one decimal place.

Quality Cost Classification	Activity Cost			Percent of Total Department Cost
Prevention	$			%
Appraisal				%
Internal failure				%
External failure				%
Not a cost of quality				%
Total	$			%

4. Determine the percentages of total department costs that are value-added and non-value-added. If required, round percentages to one decimal place.

	Activity Cost			Percent of Total Department Cost
Value-added	$			%
Non-value-added				%
Total	$			%