Required information

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Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to cost of quality (COQ) in 2019 and 2020 (in thousands of dollars):

	2019			2020
Sales	$	15,900		$	19,900
Materials inspection		290			59
In-process (production) inspection		159			124
Finished product inspection		240			69
Preventive equipment maintenance		19			59
Scrap (net)		490			290
Warranty repairs		690			440
Product design engineering		149			260
Vendor certification		21			59
Direct costs of returned goods		265			79
Training of factory workers		39			139
Product testingequipment maintenance		59			59
Product testing labor		200			89
Field repairs		69			39
Rework before shipment		230			199
Product-liability settlement		350			59
Emergency repair and maintenance		190			74

Required:

1. Classify the cost items in the table into cost-of-quality (COQ) categories.

2. Calculate the ratio of each COQ category to revenues in each of the 2 years.

3. Calculate the percentage change in each COQ category and total COQ and comment on the results:

a. Percentage change in total COQ as a percentage of sales, from 2019 to 2020;

b. Total COQ in 2020 expressed as a percentage of 2019 sales dollars;

c. Percentage change in total prevention costs, 2019 to 2020;

d. Percentage change in total appraisal costs, 2019 to 2020;

e. Percentage change in total internal failure costs, 2019 to 2020;

f. Percentage change in total external failure costs, 2019 to 2020.

Classify the cost items in the table into cost-of-quality (COQ) categories. Calculate the ratio of each COQ category to revenues in each of the 2 years. (Enter amounts in thousands, not in whole dollar. Round your "Percentage" answers to 2 decimal places.)

	2019			2020
	Amount	% of Sales		Amount	% of Sales
Cost of quality:
Prevention costs:
Total prevention costs			%			%
Appraisal costs:
Total appraisal costs			%			%
Internal failure costs:
Total internal failure costs			%			%
External failure costs:
Total external failure costs			%			%
Total cost of quality (COQ)			%			%

Calculate the percentage change in each COQ category and total COQ and comment on the results: (Round your answers to 2 decimal places.)

3a.	Percentage change in total COQ as a percentage of sales, from 2019 to 2020		%	increase or decrease
3b.	Total COQ in 2020 expressed as a percentage of 2019 sales dollars		%
3c.	Percentage change in total prevention costs, 2019 to 2020		%
3d.	Percentage change in total appraisal costs, 2019 to 2020		%
3e.	Percentage change in total internal failure costs, 2019 to 2020		%
3f.	Percentage change in total external failure costs, 2019 to 2020		%