Whitley Company had total sales of $1,000,000 for the year ending 20X1. The costs of quality are given below.

Returns/allowances.........................$50,000

Design changes...............................60,000

Prototype inspection.........................13,000

Downtime.....................................40,000

Quality circles..................................2,000

Packaging inspection.........................14,000

Field testing.....................................6,000

Complaint adjustment........................65,000

Required:

1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide?

2. Prepare a bar graph and pie chart that illustrate each category's contribution to total quality costs. Comment on the significance of the distribution.