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

Discounts due to defects	$ 250,000.00
Scrap	$ 600,000.00
Quality engineering	$ 150,000.00
Retesting	$ 45,000.00
Vendor certification	$ 20,000.00
Quality training	$ 16,000.00
Product acceptance	$ 250,000.00
Materials inspection	$ 100,000.00
Marketing research	$ 15,000.00
Product liability	$ 600,000.00

Required:

1. Prepare a quality cost report by classifying costs by category and expressing each category as a percentage of sales.

2. What message does the cost report provide?

3. If you were to address the quality issues, which category is the first?

4. Why?(Note: Round to two decimal places when needed.)