iCover produces covers for all makes and models of iPad. iCover sells 1 000 000 units each year at a price of $20 per unit and a contribution margin of 40%. A survey of iCover customers over the past 12 months indicates that customers were very satisfied with the products but a disturbing number of customers were disappointed because the products they purchased did not fit their iPads properly. They then had to hassle with returns and replacements. iCover's managers want to modify their production processes to develop products that more closely match iCover's specifications because the quality control in place to prevent ill-fitting products from reaching customers is not working very well. The current costs of quality are as follows: $400 000 $150 000 Prevention costs Appraisal costs Internal failure costs Rework Scrap External failure costs Product replacements Lost sales from customer returns $325 000 $ 75 000 $400 000 $650 000 The Quality Control manager and controller have forecast the following additional costs to modify the production process: CAD design improvement $125 000 Improve machine calibration to specifications $210 000 Required 1. Which cost-of-quality category are managers focusing on? Is this a sound approach? Explain your answer. 2. If the improvements result in a 55% decrease in customer replacem cost and a 70% decrease in customer returns, what is the impact on the overall COQ and the company's operating profit? What should iCover do? Explain. 3. Calculate each COQ category as a percentage of total quality costs and of sales before and after the change in the production process. Comment briefly on your results