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Exercise 2 (Cost of Quality Report) The Bali Company manufactures custom-designed milling machines and incurred the following cost of quality in 20X3 and 20X4: Rework Quality manual Product design Testing Retesting Product recalls Field service Disposal of defective units 20X4 P200,000 40,000 300,000 80,000 50,000 360,000 230,000 90,000 20X3 P250,000 50,000 270,000 60,000 90,000 500,000 350,000 85,000 The total sales in each of the two years were P6,000,000. The firm's cost of goods sold is typically one-third of the net sales. Organizational Innovations 165 Required: 1. Prepare a cost-of-quality report that classifies the firm's costs under the proper cost-of-quality category. 2. Calculate the ratio of each cost-of-quality category to sales in each of the two years. Comment on the trends in cost of quality between 20X3 and 20X4. 3. Give three examples of nonfinancial measures that Bali might want to monitor as part of a total quality management effort