Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to cost of quality (COQ) in 2019 and 2020 (in thousands of dollars):

	2019			2020
Sales	$	17,000		$	21,000
Materials inspection		400			70
In-process (production) inspection		170			135
Finished product inspection		350			80
Preventive equipment maintenance		30			70
Scrap (net)		600			400
Warranty repairs		800			550
Product design engineering		160			370
Vendor certification		20			70
Direct costs of returned goods		375			90
Training of factory workers		50			150
Product testingequipment maintenance		70			70
Product testing labor		310			100
Field repairs		80			50
Rework before shipment		340			210
Product-liability settlement		460			70
Emergency repair and maintenance		300			85

Required:

1. Classify the cost items in the table into cost-of-quality (COQ) categories.

2. Calculate the ratio of each COQ category to revenues in each of the 2 years.

3. Calculate the percentage change in each COQ category and total COQ and comment on the results:

a. Percentage change in total COQ as a percentage of sales, from 2019 to 2020;

b. Total COQ in 2020 expressed as a percentage of 2019 sales dollars;

c. Percentage change in total prevention costs, 2019 to 2020;

d. Percentage change in total appraisal costs, 2019 to 2020;

e. Percentage change in total internal failure costs, 2019 to 2020;

f. Percentage change in total external failure costs, 2019 to 2020.

Req 1 & 2:

Req 3:

2019 2020 Amount % of Sales Amount % of Sales Cost of quality: Prevention costs: % % Total prevention costs Appraisal costs: % % Total appraisal costs Internal failure costs: % % Total internal failure costs External failure costs: % % Total external failure costs Total cost of quality (COQ) % % % 3a. Percentage change in total COQ as a percentage of sales, from 2019 to 2020 36. Total COQ in 2020 expressed as a percentage of 2019 sales dollars 3c. Percentage change in total prevention costs, 2019 to 2020 3d. Percentage change in total appraisal costs, 2019 to 2020 3e. Percentage change in total internal failure costs, 2019 to 2020 3f. Percentage change in total external failure costs, 2019 to 2020 % % % % %