Cornerstone Exercise 14.2 (Algorithmic) Interim Quality Performance Report

Davis, Inc., had the following quality costs for the years ended December 31, 2014 and 2015:

	2014	2015
Prevention costs:
Quality audits	$66,000	$99,000
Vendor certification	118,500	177,750
Appraisal costs:
Product acceptance	$94,000	$141,000
Process acceptance	87,000	117,500
Internal failure costs:
Retesting	$96,000	$88,000
Rework	173,000	214,000
External failure costs:
Recalls	$145,000	$116,000
Warranty	330,000	298,000

At the end of 2014, management decided to increase its investment in control costs by 50 percent for each categorys 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 2014 and 2015.

Required:

1. Calculate the budgeted costs for 2015.

$ ___

Prepare an interim quality performance report.

Note: Enter all answers as positive amounts. If there is no variance enter "0" for your answer. If the budget variance amount is unfavorable enter "U" in the last column of the table, enter"F" if it is favorable, or NA if there is no change. Round percentage answers to two decimal places. For example, 5.789% would be entered as "5.79".

Davis, Inc.
Interim Standard Performance Report: Quality Costs
For the Year Ended December 31, 2015
		Actual Costs		Budgeted Costs		Variance		U, F or NA
Prevention costs:
Process acceptance Product acceptance Quality audits Recalls Retesting Rework Warranty Correct 14 of Item 2		$ Correct 15 of Item 2		$ Correct 16 of Item 2		Correct 17 of Item 2		Correct 18 of Item 2
Process acceptance Product acceptance Recalls Retesting Rework Vendor certification Warranty Correct 19 of Item 2		Correct 20 of Item 2		Correct 21 of Item 2		Correct 22 of Item 2		Correct 23 of Item 2
Total prevention costs		$ Correct 25 of Item 2		$ Correct 26 of Item 2		Correct 27 of Item 2		Correct 28 of Item 2
Appraisal costs:
Product acceptance Quality audits Recalls Retesting Rework Vendor certification Warranty Correct 34 of Item 2		$ Correct 35 of Item 2		$ Correct 36 of Item 2		Correct 37 of Item 2		Correct 38 of Item 2
Process acceptance Quality audits Recalls Retesting Rework Vendor certification Warranty Correct 39 of Item 2		Correct 40 of Item 2		Correct 41 of Item 2		$ Correct 42 of Item 2		Correct 43 of Item 2
Total appraisal costs		$ Correct 45 of Item 2		$ Correct 46 of Item 2		$ Correct 47 of Item 2		Correct 48 of Item 2
Internal failure costs:
Process acceptance Product acceptance Quality audits Recalls Retesting Vendor certification Warranty Correct 54 of Item 2		$ Correct 55 of Item 2		$ Correct 56 of Item 2		$ Correct 57 of Item 2		Correct 58 of Item 2
Process acceptance Product acceptance Quality audits Recalls Rework Vendor certification Warranty Correct 59 of Item 2		Correct 60 of Item 2		Correct 61 of Item 2		Correct 62 of Item 2		Correct 63 of Item 2
Total internal failure costs		$ Correct 65 of Item 2		$ Correct 66 of Item 2		$ Correct 67 of Item 2		Correct 68 of Item 2
External failure costs:
Process acceptance Product acceptance Quality audits Recalls Retesting Rework Vendor certification Correct 74 of Item 2		$ Correct 75 of Item 2		$ Correct 76 of Item 2		Correct 77 of Item 2		Correct 78 of Item 2
Process acceptance Product acceptance Quality audits Retesting Rework Vendor certification Warranty Correct 79 of Item 2		Correct 80 of Item 2		Correct 81 of Item 2		Correct 82 of Item 2		Correct 83 of Item 2
Total external failure costs		$ Correct 85 of Item 2		$ Correct 86 of Item 2		$ Correct 87 of Item 2		Correct 88 of Item 2
Total quality costs		$ Correct 90 of Item 2		$ Correct 91 of Item 2		$ Correct 92 of Item 2		Correct 93 of Item 2
Percentage of sales		% Correct 95 of Item 2		% Correct 96 of Item 2		% Correct 97 of Item 2