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:

Amount Descriptions
Appraisal
External failure
Internal failure
Non-value-added
Prevention
Value-added

B. Prepare a cost of quality report. Assume that sales are $2,200,000. Round percentages to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

C. Prepare a value-addedon-value-added analysis. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

D. Interpret the information in (B) and (C).

What percentage of total costs of quality are considered to be value-added? ______________%

Instructions Activities Activity Cost 1 $33,000.00 Billing error correction Cable signal testing 81,000.00 3 Reinstalling service (installed incorrectly the first time) 29,000.00 4 32,400.00 Repairing satellite equipment Repairing underground cable connections to the customer 19,000.00 6 166,000.00 Replacing old technology cable with higher quality cable 7 Replacing old technology signal switches with higher quality switches 126,000.00 27,000.00 Responding to customer home repair requests 10 Training employees 26,600.00 $540,000.00 Total 11 Digital River Inc. Cost of Quality Report Percent of Total Percent of Total Quality Cost Quality Cost Classification 1 Quality Cost Sales 2 4 Total 6 Digital River Inc Value-Added/Non-Value-Added Activity Analysis Category Amount Percent 1 2 3 Total 4