Interim Quality Performance Report

Andresen Company had the following quality costs for the years ended June 30, 20X1 and 20X2:

	20X1		20X2
Prevention costs:
Quality audits	$30,000		$45,000
Vendor certification	60,000		90,000
Appraisal costs:
Product acceptance	45,000		67,500
Process acceptance	37,500		54,750
Internal failure costs:
Retesting	51,000		45,000
Rework	108,000		90,000
External failure costs:
Recalls	75,000		60,000
Warranty	165,000		150,000

At the end of 20X1, management decided to increase its investment in control costs by 50% for each categorys items, with the expectation that failure costs would decrease by 20% for each item of the failure categories. Sales were $6,000,000 for both 20X1 and 20X2.

Required:

1. Calculate the budgeted costs for 20X2, and prepare an interim quality performance report. Round percentages to two decimal places. Enter amounts as positive numbers and select Favorable, Unfavorable, or Not applicable to describe the variance. If an amount is zero, leave it blank or enter "0".

Andresen Company
Interim Standard Performance Report: Quality Costs
For the Year Ended June 30, 20X2
	Actual	Budgeted	Variance
Prevention costs:
Quality audits	$	$	$
Vendor certification
Total prevention costs	$	$	$
Appraisal costs:
Product acceptance	$	$	$
Process acceptance
Total appraisal costs	$	$	$
Internal failure costs:
Retesting	$	$	$
Rework
Total internal failure costs	$	$	$
External failure costs:
Recalls	$	$	$
Warranty
Total external failure costs	$	$	$
Total quality costs	$	$	$
Percentage of sales	%	%	%

2. Comment on the significance of the report. How much progress has Andresen made? Andresen to meeting the planned outcomes, incurring a % . Thus, managements belief that investing an additional 50% in control costs would produce a 20% reduction in failure costs seems to be .