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 |
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6 | Total |
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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 |
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4 | Total |
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Interpret the information in (B) and (C).
What percentage of total costs of quality are considered to be value-added? %
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