Loring Company had total sales of $2,400,000 for fiscal 20X1. The costs of quality-related activities are given below.

Discounts due to defects.........................$100,000

Retesting...............................................30,000

Vendor certification..................................14,000

Rework...............................................120,000

Marketing research.....................................6,000

Process acceptance...................................14,000

Field testing...........................................16,000

Product liability.....................................200,000

Required:

1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide?

2. Prepare a bar graph and pie chart that illustrate each category's contribution to total quality costs. Comment on the significance of the distribution.