accounting

Interim Quality Performance Report Davis, Inc., had the following quality costs for the years ended December 31, 20x4 and 20x5: 20x4 20x5 Prevention costs: Quality audits $68,000 $102,000 Vendor certification 123,500 185,250 Appraisal costs: Product acceptance $88,000 $132,000 Process acceptance 93,000 100,000 Internal failure costs: Retesting $92,000 $88,000 Rework 204,000 182,000 External failure costs: Recalls $135,000 $108,000 Warranty 330,000 302,000 At the end of 20x4, management decided to increase its investment in control costs by 50 percent for each category's items with the expectation that failure costs would decrease by 20 percent for each item of the failure categories. Sales were $12,000,000 for both 20x4 and 20x5. Required: 1. Calculate the budgeted costs for 20x5. Feedback Check My Work The costs of quality are associated with two subcategories of quality-related activities: control activities and failure activities. Prepare an interim quality performance report. Enter all answers as positive amounts. If there is no variance enter "0" for your answer. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table, select "Favorable" if it is favorable, or No effect if there is no change. Round percentage answers to two decimal places. For example, 5.789% would be entered as "5.79". Davis, Inc.Davis, Inc. Interim Standard Performance Report: Quality Costs For the Year Ended December 31, 20x5 Actual Costs Budgeted Costs Variance Unfavorable, Favorable or No effect Prevention costs: Quality audits v $ 102,000 102,000 No effect v Vendor certification v 185,250 185,250 No effect v Total prevention costs 287,250 287,250 No effect v Appraisal costs: Product acceptance v $ 132,000 +9 132,000 0 No effect v Process acceptance v 100,000 139,500 39,500 Favorable v Total appraisal costs 232,000 V 271,500 V 39,500 Favorable v Internal failure costs: Retesting v X Rework v do odpoil Unfavorable v Unfavorable v Total internal failure costs Unfavorable v External failure costs: Recalls v No effect v Warranty v Unfavorable v Total external failure costs Unfavorable v Total quality costs Unfavorable v Percentage of sales % Unfavorable v Feedback Check My Work Review the interim quality performance report comparing budgeted and actual performance you have learned in the chapter.2. What can be inferred from the report regarding the progress Davis has made? Davis has come very close to meeting the planned outcomes v 3. What if sales were $12,000,000 for 20x4 and $15,000,000 for 20x5? What adjustment to budgeted rework costs would be made? (Note: Quality auditing is a discretionary cost and its budget is not affected by the change in sales revenue in 20x5.) New total budgeted rework costs: $