Interim Quality Performance Report Davis, Inc., had the following quality costs for the years ended December 31, 20x4 and 20x5: 20x4 20x5 $75,000 $112,500 186,750 124,500 $84,000 $126,000 107,000 115,000 Prevention costs: Quality audits Vendor certification Appraisal costs: Product acceptance Process acceptance Internal failure costs: Retesting Rework External failure costs: Recalls Warranty $96,000 $86,000 200,000 179,000 $145,000 315,000 $116,000 298,000 At the end of 20x4, management decided to increase its investment in control costs by 50 percent for each category's items with the expectation that failure costs would decrease by 20 percent for each item of the failure categories. Sales were $12,000,000 for both 20x4 and 20x5. Required: 1. Calculate the budgeted costs for 20x5. 1,719,750 X Prepare an interim quality performance report. Enter all answers as positive amounts. If there is no variance enter "0" for your answer. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table, select "Favorable" if it is favorable, or No effect if there is no change. Round percentage answers to two decimal places. For example, 5.789% would be entered as "5.79". Davis, Inc. Interim Standard Performance Report: Quality Costs For the Year Ended December 31, 20x5 Actual Costs Budgeted Costs Variance Unfavorable, Favorable or No effect Prevention costs: Quality audits 1,125,090 112,500 No effect Vendor certification 168,750 168,750 X No effect Total prevention costs No effect Appraisal costs: Product acceptance No effect Process acceptance Favorable Total appraisal costs $ Favorable Internal failure costs: Retesting Unfavorable Rework Unfavorable Total internal failure costs Unfavorable External failure costs: External failure costs: Recalls No effect Warranty Unfavorable Total external failure costs Unfavorable Total quality costs Unfavorable Percentage of sales % Unfavorable Feedback 2. What can be inferred from the report regarding the progress Davis has made? Davis has come very close to meeting the planned outcomes 3. What if sales were $12,000,000 for 20x4 and $15,000,000 for 20x5? What adjustment to budgeted rework costs would be made? (Note: Quality auditing is a discretionary cost and its budget is not affected by the change in sales revenue in 20x5.) New total budgeted rework costs: $ Feedback Feedback Check My Work Partially correct