=+16-16 KK Costs of quality (CMA, adapted) OBJECTIVE 2 Access Ltd produces mobile phone equipment. Amy Morrison, Access Ltd’s chief executive officer, decided to devote more resources to the improvement of product quality after learning that her company had been ranked fourth in product quality in a 2012 survey of mobile phone users. Access Ltd’s quality-improvement program has now been in operation for two years, and the cost report shown here has recently been issued:

1 2

3 4

5 6

7 8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 A B C D E 30/6/2013 31/12/2013 30/6/2014 31/12/2014 Prevention costs Machine maintenance Supplier training Design reviews 214 210 200 Total prevention costs 754 650 570 Appraisal costs Incoming inspections Final testing 332 293 203 Total appraisal costs 455 383 266 Internal failure costs Rework Scrap 116 71 67 Total internal failure costs 318 236 179 External failure costs Warranty repairs Customer returns 547 264 188 Total external failure costs 632 336 256 Total quality costs Total revenues Semi-annual COQ report, Access Ltd

(In thousands)

440 $$ 440 390 $$ 330 20 100 50 40 50 510 108 123 90 63 332 440 231 202 165 112 124 355 165 85 72 68 570 735

$2040 $2159 $1605 $1271

$8240 $9080 $9300 $9020 Required 1 For each period, calculate the ratio of each COQ category to revenues and to total quality costs.