Cost of Quality and Value Added/Non-Value Added Reports for a Service Company Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Activity Cost Quality Cost Classification Value-Added/ Non-Value Added Classification Quality Control Activities Billing error correction $37,400 External failure Non-value-added Cable signal testing 129,600 Appraisal Value-added Reinstalling service installed incorrectly the first time) 80,500 External failure Non-value-added Repairing satellite equipment 36,000 Internal failure Non-value-added Repairing underground cable connections to the customer 24,300 External failure Non-value-added 154,200 Prevention Value-added Replacing old technology cable with higher quality cable Replacing old technology signal switches with higher quality switches Responding to customer home repair requests 176,300 Prevention Value-added 45,000 External failure Non-value-added Training employees 36,700 Prevention Value-added Total activity cost $720,000 Feedback Check My Work b. Prepare a cost of quality report. Assume that sales are $2,880,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Percent of Total Quality Cost Quality Cost Quality Cost Classification Percent of Total Sales Prevention $ % % Appraisal % % Internal failure % % External failure % % Total % % Feedback Check My Work c. Prepare a value-addedon-value-added analysis. Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis Category Amount Percent Value-added % Non-value-added % Total % Feedback Check My Work C. Reclassify the individual activities as value-added and non-value-added. Calculate the percentage of the total costs that are value-added and those that are non-value-added. d. What percentage of total costs of quality are considered to be value-added? 69.0%