Openair Ltd makes chairs for outside living spaces. The company has been working on improving quality over the past year and wants to evaluate how well it has done on costs-of-quality (COQ) measures. Below are costs of quality, and revenues, relating to the past two years:

Information about Openair Ltd
	2018	2017
Supplier evaluation	$ 5,500	$ 5,000
Scrap	$ 5,900	$ 7,500
Warranty repair costs	$ 7,960	$ 9,980
Design engineering	$ 6,775	$ 4,475
Inspection	$ 4,600	$ 3,500
Rework	$ 5,800	$ 8,980
Total COQ	$ 36,535	$ 39,435
Total Revenue	$ 575,000	$ 500,000

(a) Classify the costs into prevention, appraisal, internal failure and external failure costs. (2 marks)

(b) Prepare a COQ report by calculating the costs of quality for each category and the ratio of each COQ category to total quality costs and revenue. A template has been provided below. (14 marks)

(c) Comment on whether there has been an improvement in the cost of quality or not in 2018, and suggest possible reasons for this. (3 marks)