In 2012, Tru-Delite Frozen Desserts, Inc., instituted a quality improvement program. At the end of 2013, the management of the corporation requested a report to show the amount saved by the measures taken during the year. The actual sales and quality costs for 2012 and 2013 are as follows:

Tru-Delite's management believes that quality costs can be reduced to 2.5 percent of sales within the next five years. At the end of 2017, Tru-Delite's sales are projected to grow to $750,000. The projected relative distribution of quality costs at the end of 2017 is as follows:
Scrap ............................ 15%
Training program ................ 20
Supplier evaluation .............. 25
Test labor ......................... 25
Inspection labor .................. 15
Total quality costs ............ 100%
Required:
1. Profits increased by what amount due to quality improvements made in 2013?
2. Prepare a long-range performance report that compares the quality costs incurred at the end of 2013 with the quality cost structure expected at the end of 2017.
3. Are the targeted costs in the year 2017 all value-added costs? How would you interpret the variances if the targeted costs are value-added costs?
4. What would be the profit increase in 2017 if the 2.5 percent performance standard is met in that year?

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2012 2013 Sales Scrap Rework Training program Consumer complaints S600,000 15,000 20,000 5,000 10,000 8,000 S600,000 15,000 10,000 6,000 5,000 Lost sales, incorrect labeling Test labor Inspection labor Supplier evaluation 12,000 25,000 15,000 8,000 24,000 13,000