In 2021, Lux Company initiated a full-scale, quality improvement program. At the end of the year, Mikal, the President, noted with some satisfaction that the defects per unit of product had dropped significantly compared to the prior year. He was also pleased that relationships with suppliers had improved and defective materials had declined. The new quality training program was also well accepted by employees. Of most interest to the President, however, was the impact of the quality improvements on profitability. To help assess the dollar impact of the quality improvements, the actual sales and the actual quality costs for 2020 and 2021 were as follows: Sales Yield losses Packaging inspection Discount allowances for customers Rework 2020 2021 8,000,000 10,000,000 160,000 100,000 320,000 300,000 120,000 140,000 360,000 320,000 Raw Materials 130,000 170,000 Quality circles 4,000 40,000 Downtime (defective parts) 200,000 150,000 Returned products 160,000 160,000 Machine depreciation 6,500,000 7,200,000 Design reviews 2,000 20,000 Scrap 280,000 240,000 Product acceptance 40,000 28,000 Plant expansion 1,200,000 800,000 Process control measurement 100,000 200,000 Quality improvement projects 2,000 100,000 Warranty 400,000 440,000 Order cost 300,000 350,000 Retesting 280,000 160,000 Required: 1. Reorganize the quality costs so that they are grouped in one of four categories: appraisal, prevention, internal failure, or external failure! 2. Compute the relative distribution of quality costs for each year (based on sales revenue). Do you believe that the company is moving in the right direction in terms of the balance among the quality cost categories? Explain. 3. How much have profits increased because of the quality improvements made by Lux Company? In 2021, Lux Company initiated a full-scale, quality improvement program. At the end of the year, Mikal, the President, noted with some satisfaction that the defects per unit of product had dropped significantly compared to the prior year. He was also pleased that relationships with suppliers had improved and defective materials had declined. The new quality training program was also well accepted by employees. Of most interest to the President, however, was the impact of the quality improvements on profitability. To help assess the dollar impact of the quality improvements, the actual sales and the actual quality costs for 2020 and 2021 were as follows: Sales Yield losses Packaging inspection Discount allowances for customers Rework 2020 2021 8,000,000 10,000,000 160,000 100,000 320,000 300,000 120,000 140,000 360,000 320,000 Raw Materials 130,000 170,000 Quality circles 4,000 40,000 Downtime (defective parts) 200,000 150,000 Returned products 160,000 160,000 Machine depreciation 6,500,000 7,200,000 Design reviews 2,000 20,000 Scrap 280,000 240,000 Product acceptance 40,000 28,000 Plant expansion 1,200,000 800,000 Process control measurement 100,000 200,000 Quality improvement projects 2,000 100,000 Warranty 400,000 440,000 Order cost 300,000 350,000 Retesting 280,000 160,000 Required: 1. Reorganize the quality costs so that they are grouped in one of four categories: appraisal, prevention, internal failure, or external failure! 2. Compute the relative distribution of quality costs for each year (based on sales revenue). Do you believe that the company is moving in the right direction in terms of the balance among the quality cost categories? Explain. 3. How much have profits increased because of the quality improvements made by Lux Company