The Buffalo Machine Works of Boulder, Colorado, was evaluating its cost structure relating to quality costs. In the prior year, the company had lost $500,000 in warranty and scrap. They didn't have good numbers for rework costs. In the prior year, they had spent $100,000 training employees in quality tools and $200,000 for quality assurance personnel. Inspection costs were 2% of sales of $50 million. Evaluate these costs and recommend what actions should be taken to upper management.