Matrimon, Inc., had the following quality costs for the years ended December 31, 20X1 and 20X2:

At the end of 20X1, management decided to increase its investment in control costs by 40% for each category’s items, with the expectation that failure costs would decrease by 25% for each item of the failure categories. Sales were $16,800,000 for both 20X1 and 20X2.

Required:
1. Calculate the budgeted costs for 20X2, and prepare an interim quality performance report. (Round percentages to 2 decimal places.)
2. Comment on the significance of the report. How much progress has Matrimon made?

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Prevention costs: Design reviews Quality audits Appraisal costs: Field testing Inspection of materials Internal failure costs: Scrap Repairs External failure costs: Lost sales Recalls 20X1 $ 84,000 168,000 126,000 105,000 140,000 308,000 224,000 504,000 20X2 $116,200 235,200 176,400 148,400 106,680 233,520 170,800 387,800