Chapter 13, Problem 22BEA

Andresen Company had the following quality costs for the years ended June 30, 20X1 and 20X2:

At the end of 20X1, management decided to increase its investment in control costs by 50% for each category’s items, with the expectation that failure costs would decrease by 20% for each item of the failure categories. Sales were $6,000,000 for both 20X1 and 20X2.

Required:

1. 1. Calculate the budgeted costs for 20X2, and prepare an interim quality performance report.
2. 2. Comment on the significance of the report. How much progress has Andresen made?