15-4 Quality Cost Report LO2 During 2007 and 2008, Wilmington Company reported sales of $6,000,000 per year. Wilmington listed the following quality costs for the past two years. Assume that all changes in the quality costs are due to a quality-improvement program. 2007 2008 Design review $ 150,000 $ 300,000 Recalls 200,000 100,000 Reinspection 100,000 50,000 Materials inspection 60,000 40,000 Quality training 40,000 100,000 Process acceptance 50,000 Scrap 145,000 35,000 Lost sales (estimated) 300,000 200,000 Product inspection 50,000 30,000 Returned goods 155,000 95,000 Total $1,200,000 $1,000,000 Required 1. Prepare a quality cost report for each year (2007 and 2008). What does this report tell management? 2. Calculate the relative distribution of quality costs by category for each year. What message does this communicate to management