Interim Quality Performance Report

Davis, Inc., had the following quality costs for the years ended December 31, 20x4 and 20x5:

	20x4	20x5
Prevention costs:
Quality audits	$68,000	$102,000
Vendor certification	113,500	170,250
Appraisal costs:
Product acceptance	$85,000	$127,500
Process acceptance	89,000	102,500
Internal failure costs:
Retesting	$98,000	$84,000
Rework	204,000	185,000
External failure costs:
Recalls	$145,000	$116,000
Warranty	325,000	290,000

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 $11,500,000 for both 20x4 and 20x5.The budgeted costs for 20x5 were $1,125,350

What if sales were $11,500,000 for 20x4 and $14,375,000 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:???