Rasmussen Video Systems (RVS) manufactures wireless home theatre systems and incurred sales of $8.9 million in the year. RVS has the following information pertaining to quality costs (in $000s):

Quality cost category Item Amount

Internal failure Scrap 160

Internal failure Rework costs 150

Appraisal Incoming materials inspection 20

Prevention Training 15

External failure Warranty repair 200

Prevention Supplier evaluations 45

Appraisal Line inspection 85

External failure Customer support 60

Internal failure Breakdown maintenance 50

Appraisal Product testing 40

The Director of Operations has suggested changes to the manufacturing process that will cost $1,500,000, but will reduce the amount of scrap and rework by 35%. Furthermore, line inspection costs can be reduced by 15%.

If the changes were to proceed and the $1,500,000 investment is made, what are the new appraisal costs as a percentage of sales?