Question
Interim Quality Performance Report Davis, Inc., had the following quality costs for the years ended December 31, 2014 and 2015: Prevention costs: 2014 2015 Quality
Interim Quality Performance Report
Davis, Inc., had the following quality costs for the years ended December 31, 2014 and 2015:
Prevention costs: 2014 2015
Quality audits $61,000 91,500
Vendor certification 117,500 176,250
Appraisal costs:
Product acceptance 90,000 135,000
Process acceptance 113,000 115,000
Internal failure costs:
Retesting 106,000 94,000
Rework 182,000 230,000
External failure costs:
Recalls 155,000 124,000
Warranty 330,000 294,000
At the end of 2014, 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 $11,000,000 for both 2014 and 2015.
Required:
1.Calculate the budgeted costs for 2015.
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