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. Value Added/ Activity Quality Cost Non-Value-Added Quality Control Activities Cost Classification Classification Billing error correction $38,200 Cable signal testing 79,500 Appraisal Reinstalling service (installed incorrectly the first time) 82,000 Repairing satellite equipment External failure 21,200 Repairing underground cable connections to the Internal failure 24,800 customer Prevention Replacing old technology cable with higher quality 100,200 cable Replacing old technology signal switches with higher 114,500 quality switches Responding to customer home repair requests 45,800 Training employees 23,800 Total activity cost $530,000 Dog Pony Training employees Total activity cost 23,800 $530,000 Non-value-added Value-added b. Prepare a cost of quality report. Assume that sales are $2,120,000. If required, round perc place. hal Three Rivers Inc. Cost of Quality Report Percent of Total Quality Cost Quality Cost Percent of Total Sales % % Quality Cost Classification Prevention Appraisal Internal failure External failure Total % % 19% % % % % c. Prepare a value-addedon-value-added analysis. Three Rivers Inc. Value-Added/Non-Value Added Activity Analysis Category Amount Percent Value-added 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 % % 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 d. What percentage of total costs of quality are considered to be value-added