Nuke-It-Now manufactures microwave ovens. The following represents the financial information from one of its manufacturing plants for two years. Year 1 Year 2 Sales $ 3,460,000 $ 3,860,000 Costs Redesign process $ 32,000 $ 35,500 Discard defective units 35,000 44,200 Training on equipment 254,000 217,000 Warranty claims 131,000 173,000 Contract cancellations 195,000 149,000 Rework 74,000 97,000 Preventive maintenance 112,000 154,000 Product liability claims 306,000 176,000 Final inspection 199,000 198,000 Required: a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs. b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for year 1 and year 2

Activity-based costing (abc) is not truly a cost collection mechanism as much as it is an inventory valuation method. the main purpose for implementing an activity-based cost system is to try to overcome some of the cost distortions that occur in traditional costing from product differences when there are variations in size and complexity. however, one of the disadvantages of utilizing abc is that the additional information gathering necessary to implement costing with that level of detail might be beyond the reach of some companies with resource or financial constraints. with this in mind, what kinds of industries or companies do you think would benefit most from using activity-based costing and why? in designing or modifying an accounting system to capture appropriate costs for abc, what considerations do you think would need to be made?