This problem can be solved as a spreadsheet application and should be set up on a spreadsheet if Problem 17-71 is also assigned.) 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):

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. (Round all answers to 2 decimal places.)

3. Comment on the results. In conjunction with answering this question, calculate and refer to the following results:

a. Percentage change (to 2 decimal places) in total COQ as a percentage of sales, from 2019 to 2020;

b. Total COQ in 2020 expressed as a percentage (to 2 decimal places) of 2019 sales dollars;

c. Percentage change in total prevention costs (to 2 decimal places), 2019 to 2020;

d. Percentage change in total appraisal costs (to 2 decimal places), 2019 to 2020;

e. Percentage change in total internal failure costs (to 2 decimal places), 2019 to 2020;

f. Percentage change in total external failure costs (to 2 decimal places), 2019 to 2020.

4. In addition to the financial measures listed in the table, what nonfinancial measures might Acme monitor in its effort to achieve overall improvements in quality?

5. Are financial or nonfinancial quality measures likely of more use to (a) managers or (b) operating personnel? Why?

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2019 2020 $16,000 $20,000 Sales Materials inspection In-process (production) inspection Finished product inspection Preventive equipment maintenance Scrap (net) Warranty repairs Product design engineering 300 60 160 125 250 70 20 60 500 300 700 450 270 150 Vendor certification 10 60 Direct costs of returned goods Training of factory workers Product testing-equipment maintenance Product testing labor Field repairs Rework before shipment Product-liability settlement Emergency repair and maintenance 275 40 140 60 60 210 90 70 40 240 200 360 60 200 75