Long term performance report

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Long-Term Performance Report Nabors Company had actual quality costs for the year ended June 30, 20x5, as given below. Prevention costs: Prototype inspection $ 230,000 Vendor certification 460,000 Total prevention costs $ 690,000 Appraisal costs: Process acceptance $ 245,000 Test labor 290,000 Total Appraisal costs $ 535,000 Internal failure costs: Retesting $ 152,500 Rework 305,000 Total internal failure costs $ 457,500 External failure costs: Recalls $ 292,750 Product liability 436,750 Total external failure costs $ 729,500 Total quality costs $2,412,000 At the zero-defect state, Nabors expects to spend $287,500 on quality engineering, $57,500 on vendor certification, and $60,000 on packaging inspection. Assume sales to be $2,700,000. Required: 1. Prepare a long-range performance report for 20x5. Enter all answers as positive amounts. If the budget variance amount is unfavorable select "Unfavorable" in the last column of the table. Select "Favorable" if it is favorable. Round percentage answers to two decimal places, if rounding is required. For example, 5.789% would be entered as "5.79". Enter "0" as the target cost amount if there would be no cost at the zero-defect state. Nabors Company Long-Range Performance Report For the Year Ended June 30, 20x5 Actual Costs Target Costs Budget Variance Favorable; or Unfavorable Prevention costs: Total prevention costs Appraisal costs: Total appraisal costs Internal failure costs: Total internal failure costs External failure costs: Total external failure costs Total quality costs Percentage of sales 2. Why are quality costs still present for the zero-defect state