Question x: Lean manufacturing: Cost of quality At the beginning of this year, Bing Company initiated a quality improvement programme. The programme was successful in reducing some quality-related costs. To help assess the impact of the quality improvement programme, Bing's managers collected the following data for this year and last year: 2020 2021 Sales $15,000,000 $16,000,000 Complaint adjustment $150,000 $110,000 Design changes $200,000 $150,000 Inspection of rework $15,000 $12,000 Materials inspection $100,000 $140,000 Product inspection $200,000 $220,000 Product warranty $900,000 $800,000 Quality circles $0 $15,000 Quality training $15,000 $40,000 Returns from customers $200,000 $150,000 Rework $750,000 $600,000 Scrap $500,000 $450,000 Supplier verification $20,000 $40,000 Required: (a) Compute prevention costs, appraisal costs, internal failure costs, and external failure costs as a percentage of sales for 2020 and for 2021. (4 marks) (b) Explain what the computations in (a) tell you about the quality improvement programme. (1 mark) (c) What is the effect on profit of the quality improvements? ( mark) (d) If quality costs can be reduced even further to 2.5 percent of 2021 sales, what is the impact on profit? ( mark) TOTAL: 6 MARKS