1.For each period, calculate the ratio of each COQ category to revenues and to total quality costs.

2.Based on the results of requirement 1, would you conclude that Clayton's quality program has been successful? Prepare a short report to present your case.

3.Based on the 2015 survey, Amanda Westerly believed that Clayton had to improve product quality. In making her case to Clayton management, how might Westerly have estimated the opportunity cost of not implementing the quality-improvement program?

For each period, calculate the ratio of each COQ category to revenues and to total quality costs.

Begin by calculating the ratio of each COQ category to revenues and to total quality costs for

6/30/20162016,

then

12/31/20162016.

(Round your answers to the nearest whole percentage. Total quality costs as a percentage of revenues may not match the sum of each category's percentage due to rounding.)

Semi-Annual COQ Report, Clayton, Inc. (in thousands)
	6/30/2016	12/31/2016	6/30/2017	12/31/2017
Prevention costs
Machine maintenance	$520	$520	$450	$290
Supplier training	16	102	51	41
Design reviews	40	218	212	198
Total prevention costs	576	840	713	529
Appraisal costs
Incoming inspections	111	121	94	61
Final testing	333	333	292	205
Total appraisal costs	444	454	386	266
Internal failure costs
Rework	239	204	171	107
Scrap	131	126	70	63
Total internal failure costs	370	330	241	170
External failure costs
Warranty repairs	170	91	81	66
Customer returns	590	521	270	193
Total external failure costs	760	612	351	259
Total quality costs	$2,150	$2,236	$1,691	$1,224
Total revenues	$8,220	$9,040	$9,260	$9,070