Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 220,000 Vendor certification 440,000 Total prevention costs $ 660,000 Appraisal costs: Process acceptance $ 235,000 Test labor 280,000 Total Appraisal costs $ 515,000 Internal failure costs: Retesting $ 147,500 Rework 295,000 Total internal failure costs $ 442,500 External failure costs: Recalls $ 395,250 Product liability 592,500 Total external failure costs $ 987,750 Total quality costs $2,605,250 At the zero-defect state, Nabors expects to spend $275,000 on quality engineering, $55,000 on vendor certification, and $55,000 on packaging inspection. Assume sales to be $2,500,000 Required: 1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state. Nabors Company Long-Range Performance Report For the Year Ended June 30, 20x5 Actual Target Budget Costs Costs Variance Favorable; or Unfavorable Prevention costs: Total prevention costs Appraisal costs: wa Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Total external failure costs oppo Total quality costs Percentage of sales % % % 2. Why are quality costs still present for the zero-defect state