Andresen Company had the following quality costs for the years ended June 30, 20X1 and 20X2:

At the end of 20X1, management decided to increase its investment in control costs by 50% for each category's items, with the expectation that failure costs would decrease by 20% for each item of the failure categories. Sales were $6,000,000 for both 20X1 and 20X2.
Required:
1. Calculate the budgeted costs for 20X2, and prepare an interim quality performance report.
2. Comment on the significance of the report. How much progress has Andresen made?

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20XI 20X2 Prcvcntion costs: Quality audits Vendor certification 30,000 60,000 $45,000 90,000 Abbraisal costs: Product acceptance Process acceptance Internal failure costs: 45,000 37,500 67,500 54,750 51,000 45,000 Ketesting Rework 108,000 90,000 External failure costs: Recalls Warranty 75,000 165,000 60,000 150,000