Baxter, Inc., produces cell phone equipment. Amanda Tremont, Baxter's president, implemented a quality-improvement program that has now been in operation for 2 years. The cost report shown here has recently been issued. (Click the icon to view the cost report.) Read the requirements. Requirement 1. 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 6/30/2016, then 12/31/2016. (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.) Requirements 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 Baxter's quality program has been successful? Prepare a short report to present your case. 3. Based on the 2015 survey, Amanda Tremont believed that Baxter had to improve product quality. In making her case to Baxter management, how might Tremont have estimated the opportunity cost of not implementing the quality-improvement program? 6/30/2016 (in thousands) % of % of total Actual revenues quality costs $ 430 25 40 495 % % Prevention costs Machine maintenance Supplier training Design reviews Total prevention costs Appraisal costs Incoming inspections Final testing Total appraisal costs Internal failure costs Rework 115 340 455 % % 237 121 Scrap 358 % % 164 570 Total internal failure costs External failure costs Warranty repairs Customer returns Total external failure costs Total quality costs Total revenues 734 % % % $ 2,042 % $ 8,340 - X Data table 753 340 204 Semi-Annual COQ Report, Baxter, Inc. (in thousands) 6/30/2016 12/31/2016 6/30/2017 12/31/2017 Prevention costs Machine maintenance $ 430 $ 430 $ 350 $ 230 Supplier training 25 104 52 42 40 219 211 Design reviews 198 Total prevention costs 495 813 488 Appraisal costs Incoming inspections 115 131 84 80 Final testing 340 298 Total appraisal costs 455 471 382 284 Internal failure costs Rework 237 210 180 107 Scrap 121 118 80 84 358 Total internal failure costs 328 220 171 External failure costs Warranty repairs 164 89 68 62 570 Customer returns 465 289 185 Total external failure costs 734 554 337 247 Total quality costs 5 2.042 $ 2,106 5 1,561 $ 1.150 Total revenues $ 8.340 $ 9,140 $ 9.280 $ 9,070