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 $25,800 Cable signal testing 64,500 Reinstalling service (installed incorrectly the first time) 55,500 Repairing satellite equipment 30,100 Repairing underground cable connections to the customer 16,800 Replacing old technology cable with higher quality cable 86,700 Replacing old technology signal switches with higher quality switches 99,100 Responding to customer home repair requests 30,900 Training employees 20,600 Total activity cost $430,000 b. Prepare a cost of quality report. Assume that sales are $2,150,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Quality Cost Classification Percent of Total Quality Cost 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? Quality Cost