Elite Company had total sales of $20,000,000 for the year ending December 31, 20X1. Elite's costs of quality are as follows:

Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? If you were to address the quality issues, which category is the first? Why? (Note: Round computations to two decimal places.)

Discounts due to defects	$250,000
Scrap	600,000
Quality engineering	150,000
Retesting	45,000
Vendor certification	20,000
Quality training	16,000
Product acceptance	250,000
Materials inspection	100,000
Marketing research	15,000
Product liability	600,000