Osborn, Inc., produces cell phone equipment. Janet 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. Semi-Annual COQ Report, Osborn, Inc. (in thousands) 6/30/2016 12/31/2016 6/30/2017 12/31/2017 Prevention costs Machine maintenance $ 420 $ 420 $ 370 $ 320 Supplier training 24 110 55 45 Design reviews 50 200 197 196 Total prevention costs 494 730 622 561 Appraisal costs Incoming inspections 105 122 85 65 330 330 Final testing 297 202 435 452 382 267 Total appraisal costs Internal failure costs Rework 226 211 169 108 129 Scrap 121 73 65 355 332 Total internal failure costs 242 173 External failure costs Warranty repairs 170 91 79 72 Customer returns 274 190 742 620 Total external failure costs 353 262 $ Total quality costs 2,026 S 2.134 $ 1,599 $ 1.263 Total revenues $ 8.230 $ 9,040 $ 9.860 $ 8,910 572 529 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, Janet 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? Print Done 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 $ 420 24 50 Prevention costs Machine maintenance Supplier training Design reviews Total prevention costs Appraisal costs Incoming inspections 494 % % 105 330 Final testing 435 Total appraisal costs % % % Internal failure costs Rework 226 129 355 % % Scrap Total internal failure costs External failure costs Warranty repairs 170 Customer returns 572 742 Total external failure costs % % $ 2,026 % Total quality costs Total revenues $ 8,230