Cruz Company had total sales of $3,600,000 for fiscal 20X1. The costs of quality-related activities are given below.

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

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Discounts due to defects Reinspection Prototype inspection Rework Marketing research Process acceptance Packaging inspection Product liability $150,000 45,000 21,000 180,000 9,000 21,000 24,000 300,000