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. Quality Control Activities Billing error correction Cable signal testing Activity Quality Cost Cost Classification $37,600 External failure 79,800 Appraisal Value-Added/ Non-Value-Added Classification Reinstalling service (installed incorrectly the first time) 80,900 External failure Non-value-added Value-added Non-value-added Repairing satellite equipment 17,100 Internal failure Non-value-added Repairing underground cable connections to the customer 24,500 External failure Non-value-added Replacing old technology cable with higher quality cable 119,700 Prevention Value-added Replacing old technology signal switches with higher quality switches Responding to customer home repair requests Training employees Total activity cost 136,800 Prevention Value-added 45,100 External failure Non-value-added 28,500 Prevention Value-added $570,000 Feedback Check My Work Correct b. Prepare a cost of quality report. Assume that sales are $2,850,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Quality Cost Percent of Total Quality Cost Classification Quality Cost Percent of Total Sales Prevention % % Appraisal % % Internal failure % % External failure % % % % Total c. Prepare a value-added/non-value-added analysis. Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis Category Value-added Non-value-added Total Feedback Amount Percent % % % 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