7-70 Cost-of-Quality (COQ) Analysis; Nonfinancial Performance Measures (Note: This problem can be solved as a spreadsheet application and should be set up on a spreadsheet if Problem 17-71 is also assigned.) Acme Materials Company manufactures and sells synthetic coatings that can with- stand high temperatures. Its primary customers are aviation manufacturers and maintenance compa- nies. The following table contains financial information pertaining to cost of quality (COO) in 2019 and 2020 (in thousands of dollars). 2019 2020 $20,000 60 125 70 60 300 450 270 60 Sales Materials inspection In-process (orduction Finished product Spec Preventive equipment nee Scrap (net) Warranty repairs Product design engineering Vendor certification Direct costs of returned goods Training of factory workers Product testing-equipment maintenance Product testing labor Field repairs Rework before shipment Product liability settlement Emergency repair and maintenance $16,000 300 160 250 20 500 700 150 10 275 40 60 210 70 240 360 200 80 140 60 90 40 200 60 75 C. Required 1. Classify the cost items in the table into cost-of-quality (CO) categories 2. Calculate the ratio of each COQ category to revenues in each of the 2 years. Round all answers to 2 decimal places.) 3. Comment on the results. In conjunction with answering this question, calculate and refer to the follow- ing results: a. Percentage change (to 2 decimal places) in total COQ as a percentage of sales, from 2019 to 2020; b. Total COQ in 2020 expressed as a percentage (to 2 decimal places) of 2019 sales dollars, Percentage change in total prevention costs (to 2 decimal places), 2019 to 2020: d. Percentage change in total appraisal costs (to 2 decimal places), 2019 to 2020: Percentage change in total internal failure costs (to 2 decimal places), 2019 to 2020: f. Percentage change in total external failure costs (to 2 decimal places), 2019 to 2020. 4. In addition to the financial measures listed in the table, what nonfinancial measures might Acme moni- tor in its effort to achieve overall improvements in quality? 5. Are financial or nonfinancial quality measures likely of more use to (a) managers or (b) operating per- sonnel? Why? Llom 17-70 to e