Question
Digital River Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Digital Light are identified as follows:
Digital River Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Digital Light are identified as follows:
| 1 | Activities | Activity Cost |
| 2 | Billing error correction | $30,000.00 |
| 3 | Cable signal testing | 86,400.00 |
| 4 | Reinstalling service (installed incorrectly the first time) | 29,000.00 |
| 5 | Repairing satellite equipment | 32,400.00 |
| 6 | Repairing underground cable connections to the customer | 19,000.00 |
| 7 | Replacing old technology cable with higher quality cable | 170,000.00 |
| 8 | Replacing old technology signal switches with higher quality switches | 123,000.00 |
| 9 | Responding to customer home repair requests | 24,600.00 |
| 10 | Training employees | 25,600.00 |
| 11 | Total | $540,000.00 |
| Amount Descriptions | |
| Appraisal | |
| External failure | |
| Internal failure | |
| Non-value-added | |
| Prevention | |
| Value-added |
Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added.
| Quality Activities | Activity Cost | Quality Cost Classification | VA/NVA |
| Billing error correction | $ 30,000 | ||
| Cable signal testing | 86,400 | ||
| Reinstalling service (installed incorrectly the first time) | 29,000 | ||
| Repairing satellite equipment | 32,400 | ||
| Repairing underground cable connections to the customer | 19,000 | ||
| Replacing old technology cable with higher quality cable | 170,000 | ||
| Replacing old technology signal switches with higher quality switches | 123,000 | ||
| Responding to customer home repair requests | 24,600 | ||
| Training employees | 25,600 | ||
| Total | $540,000 |
B. Prepare a cost of quality report. Assume that sales are $1,900,000. Round percentages to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
| Digital River Inc. |
| Cost of Quality Report |
| 1 | Quality Cost Classification | Quality Cost | Percent of Total Quality Cost | Percent of Total Sales |
| 2 |
|
|
|
|
| 3 |
|
|
|
|
| 4 |
|
|
|
|
| 5 |
|
|
|
|
| 6 | Total |
|
|
|
Prepare a value-added/non-value-added analysis. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
| Digital River Inc. |
| Value-Added/Non-Value-Added Activity Analysis |
| 1 | Category | Amount | Percent |
| 2 |
|
|
|
| 3 |
|
|
|
| 4 | Total |
|
|
Interpret the information in (B) and (C).
What percentage of total costs of quality are considered to be value-added? %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Apple Blossom Cologne Company Audit Case
Authors: Jack Paul
5th Edition
0072844507, 978-0072844504
