rend, Long-Range Performance Report

In 20x4, Tru-Delite Frozen Desserts, Inc., instituted a quality improvement program. At the end of 20x5, the management of the corporation requested a report to show the amount saved by the measures taken during the year. The actual sales and quality costs for 20x4 and 20x5 are as follows:

	20x4	20x5
Sales	$600,000	$600,000
Scrap	15,000	15,000
Rework	20,000	10,000
Training program	5,000	6,000
Consumer complaints	10,000	5,000
Lost sales, incorrect labeling	8,000	0
Test labor	12,000	8,000
Inspection labor	25,000	24,000
Supplier evaluation	15,000	13,000

Tru-Delite's management believes that quality costs can be reduced to 2.5 percent of sales within the next five years. At the end of 20x9, Tru-Delite's sales are projected to grow to $750,000. The projected relative distribution of quality costs at the end of 20x9 is as follows:

Scrap	15	%
Training program	20
Supplier evaluation	25
Test labor	25
Inspection labor	15
Total quality costs	100	%

Required:

1. Profits increased by what amount due to quality improvements made in 20x5? $____

2. Prepare a long-range performance report that compares the quality costs incurred at the end of 20x5 with the quality cost structure expected at the end of 20x9. If an amount is zero, enter "0". Round percentages to one decimal place, when rounding is required. For example, 5.8% would be entered as "5.8". Select "NA" if there is no budget variance. Round your answers to the nearest dollar, with two exceptions: round test labor and scrap long-range target costs down to the nearest dollar (for example, $905.90 rounds down to $905).

Tru-Delite Frozen Desserts, Inc. Long-Range Performance Report For the Year Ended December 31, 20x5

	Actual Costs, 20x5	Long-Range Target Costs	Budget Variance	Favourable (F), Unfavorable (U) or NA
Prevention costs:
Training program	$___	$___	$____	Unfavorable
Supplier evaluation	___	___	____	Unfavorable
Total prevention costs	$____	$___	$___	Unfavorable
Appraisal costs:
Test labor	$___	$___	$___	Unfavorable
Inspection labor	___	___	___	Unfavorable
Total appraisal costs	$____	$____	$___	Unfavorable
Internal failure costs:
Scrap	$___	$___	$___	Unfavorable
Rework	___	___	___	Unfavorable
Total internal failure costs	$__	$___	$____	Unfavorable
External failure costs:
Consumer complaints	$___	____	$___	Unfavorable
Lost sales, incorrect labeling	___	___	___	NA
Total external failure costs	$___	___	$___	Unfavorable
Total quality costs	$___	$___	$___	Unfavorable
Percentage of sales	___%	___%	___%	Unfavorable

3. What would be the profit increase in 20x9 if the 2.5 percent performance standard is met in that year? The profit

increase by $ ____