CoursHeroTranscribedText: Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 360,000 Vendor certication 720,000 Total prevention costs $ 1,080,000 Appraisal costs: Process acceptance $ 375,000 Test labor 420,000 Total Appraisal costs $ 795,000 Internal failure costs: Retesting $ 217,500 Rework 435,000 Total internal failure costs $ 652,500 External failure costs: Recalls $ 347,250 Product liability 422,250 Total external failure costs $ 769,500 Total quality costs $3,297,000 At the zerodefect state, Nabors expects to spend $450,000 on prototype inspection, $90,000 on vendor certification, and $65,000 on process acceptance. Assume sales to be $2,300,000. Required: 1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state. Nabors Company Long-Range Performance Report For the Year Ended June 30, 20:5 Actual Costs Target Costs Budget Variance Favorable, or Unfavorable 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 quality costs $ $ Percentage of sales I % ULLJ LLJ LLLl LLLl ULLJ LL] LLLl LLLl % "A: v 2. Why are quality costs still present for the zero-defect state? Inefficiencies mean that some defects will still occur. Prevention costs are value-added costs that are necessary to maintain the quality gains. Some non-valueadded costs will st' I persist, even at the zero-defect state