Interim Quality Performance Report Davis, Inc., had the following quality costs for the years ended December 31, 20x4 and 20x5: 20x1 20x5 Prevention costs: Quality audits $64,000 $06,000 Vendor certification 114,500 171,750 Appraisal costs: Product acceptance $92,000 $135,000 Process receptance: 99,000 105,000 Internal failure costs: Retesting $102,000 $92,000 Rework 200,000 182,000 External failure costs: Recalls $160,000 $120,000 Warranty 340,000 294,000 At the end of 20x4, management decided to increase its investment in control costs by 50 percent for each category's items with the expectation that failure costs would decrease by 20 percent for cach item of the failure categories, Sales were $12,000,000 for both 20x4 and 20x5. Required: 1. Calculate the budgeted costs for 20x5. Prepare an interim quality performance report. Enter all answers as positive amounts. If there is no variance enter "O" for your answer. If the budget variance arribunt is unfavorable select "Unfavorable" in the last column of the table, select "Favorable" if it is favorable, or No effect if there is no change. Round percentage answers to two decimal places. For example, 5.789% would be ontered as '5.79", Davis, Inc. Interim Standard Performance Report: Quality Costs For the Year Ended December 31, 20x5 Actual Costs Budgeted Costs Variance Unfavorable, Favorable or no effect Prevention costs: Quality audits No cffect Vendor certification No effect No effect Total prevention costs Appraisal costs: Product acceptance No effect Process acceptance Favorable Total appraisal costs Favorable Intemal failure costs: Retesting Unfavorable Rework Unfavorable Unfavorable Total internal failure costs External failure costs: Recalls No effect Warranty Unfavorable Total external failure costs $ Unfavorable Total quality costs $ Unfavorable % Percentage of sales 06 Unfavorable 2. What can be inferred from the report regarding the progress Davis has made? Davis has come very close to meeting the planned outcomes 3. What if sales were $12,000,000 for 20x4 and $15,000,000 for 20x5? What adjustment to budgeted rework costs would be made? (Note: Quality auditing is a discretionary cost and its hudget is not affected by the change in sales revenue in 20x5.) New total budgeted rework exists