Answer
The results of the cost of quality report are representative of a company which undertakes quality control as opposed to quality assurance in that the majority of the costs relate to failure, either of an internal or external nature. Additionally, since the costs have been amassed for the first time for this task, it is possible that they are inaccurate and probably understated as some costs are likely to have been omitted.

Costs of conformance
Coruisk will need to invest more in quality audits and, possibly, in testing equipment to ensure that the product is being produced to the right standard as it progresses through the production process. Whereas there may still be a requirement for final inspection, it should not be someone’s full-time occupation and the supervisor may be more meaningfully deployed elsewhere for at least part of his/her role.

These practices should reduce both the internal and external failure costs, particularly those of scrap and rework, which both appear very high currently. Machine downtime is perhaps due to the very little amount currently spent on preventative maintenance and the cost of internal failure should also fall with enhanced maintenance.
Costs of non-conformance
The significant external failure cost is of most concern. To operate to the JIT principles which Ericht is seeking, Coruisk has to ensure that these costs are as close to zero as possible. It is concerning, for example, that 3% （$135,000） of the revenue figure is taken up by dealing with complaints from Ericht.
Some of this may be due to misunderstandings between the companies which could be rectified by the closer working relationship that JIT production principles demand. Nevertheless, it is clear that Coruisk must ensure that it addresses these costs as it is completely reliant upon Ericht for its business.

The amount of money attributed to product recalls and cost of goods returned （4% of the revenue figure） is concerning as this
suggests that defective products have not been detected in Coruisk’s current quality control system. This may be due to the
bonus system currently in place and the desire to produce quantity, quickly, and not quality. A change to the production process should address this but it could be met with hostility if the workers’ bonus is under threat and Coruisk may need to introduce an alternative bonus scheme based on a quality-related metric which specifies, for example, the percentage of defects detected.

The forgone contribution from lost sales is also concerning as it indicates that Ericht has alternative supplier（s）. It is possible, given the cost detailed of dealing with complaints from Ericht, that this figure is considerably higher than Coruisk is estimating.
The balance of the costs must change so that the majority of Coruisk’s costs are prevention and appraisal （costs of conformance） and not costs of internal/external failure （costs of non-conformance）. Coruisk must ensure that it is producing to the standard which Ericht requests at the first time of asking and therefore Coruisk must ensure that it provides more training for staff, more preventative machine maintenance, more supplier appraisal and vetting as mentioned previously and moves to encourage a culture of zero defects with no faulty goods moving forward in the production process.