E19-18 (similar to) Question Help Osborn, Inc., produces cell phone equipment. Amanda Wellington, Osborn'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.) 6/30/2016 (in thousands) % of % of total Actual revenues quality costs Prevention costs Machine maintenance $ 490 Supplier training 21 40 Design reviews 551 Total prevention costs % % TOIMITCIT vum Appraisal costs Incoming inspections 110 330 Final testing 440 Total appraisal costs % % Internal failure costs Rework 240 123 Scrap 363 Total internal failure costs % % External failure costs Warranty repairs 170 598 Customer returns 768 Total external failure costs % % $ 2,122 Total quality costs % Total revenues $ 8,340 i Data Table Semi-Annual COQ Report, Osborn, Inc. (in thousands) 6/30/2016 12/31/2016 6/30/2017 12/31/2017 Prevention costs Machine maintenance $ 490 $ 490 $ 480 $ 240 Supplier training 21 118 59 49 40 213 212 211 Design reviews 551 821 751 500 Total prevention costs Appraisal costs Incoming inspections 110 126 82 62 330 330 290 206 Final testing 440 456 Total appraisal costs 372 268 Internal failure costs Rework 240 201 173 116 123 120 75 65 Scrap 363 321 248 181 Total internal failure costs External failure costs Warranty repairs 170 84 78 67 598 490 273 184 Customer returns 768 574 351 251 Total external failure costs $ 2,122 $ 2,172 $ 1,722 $ 1,200 Total quality costs Total revenues $ 8,340 $ 9,060 $ 9,750 $ 9,040 i 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 Osborn's quality program has been successful? Prepare a short report to present your case. 3. Based on the 2015 survey, Amanda Wellington believed that Osborn had to improve product quality. In making her case to Osborn management, how might Wellington have estimated the opportunity cost of not implementing the quality-improvement program