Bradshaw Company reported sales of $5,000,000 in 20X1. At the end of the fiscal year ( June 30, 20X1), the following quality costs were reported:

Vendor certification.................................$ 43,500

Warranty...............................................100,000

Rework................................................125,000

Field testing.............................................54,000

Quality training.........................................56,500

Process acceptance......................................40,000

Scrap......................................................75,000

Recalls.....................................................90,000

Product inspection.......................................46,000

Returned goods..........................................70,000

Required:

1. Prepare a quality cost report.

2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the distribution.

3. Assuming sales of $5,000,000, by how much would profits increase if quality improves so that quality costs are only 3% of sales?