At the beginning of the current year, Nevermore, Inc., initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:

	Preceding Year	Current Year
Sales	$2,000,000	$2,000,000
Quality circles	9,000	10,000
Packaging inspections	20,000	32,000
Scrap	100,000	90,000
Lost sales	180,000	160,000
Downtime (defect-related)	125,000	120,000
Product inspection	40,000	90,000

Required:

a.	Compute each category of quality costs as a percentage of sales for each year.
	Prevention costs
	Appraisal costs
	Internal failure costs
	External failure costs
b.	How much has profit increased as a result of quality improvements?
c.	If quality costs can be reduced to 2.0% of sales, how much additional profit would result?