Question
Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified. a. Identify
Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified.
a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added.
| Quality Control Activities | Activity Cost | Quality Cost Classification | VA/NVA Classification |
|---|---|---|---|
| Billing error correction | $58,100 | fill in the blank 1 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 2 of 18 Non-value-addedValue-added |
| Cable signal testing | 132,800 | fill in the blank 3 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 4 of 18 Non-value-addedValue-added |
| Reinstalling service (installed incorrectly the first time) | 124,900 | fill in the blank 5 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 6 of 18 Non-value-addedValue-added |
| Repairing satellite equipment | 33,200 | fill in the blank 7 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 8 of 18 Non-value-addedValue-added |
| Repairing underground cable connections to the customer | 37,800 | fill in the blank 9 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 10 of 18 Non-value-addedValue-added |
| Replacing old technology cable with higher quality cable | 156,900 | fill in the blank 11 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 12 of 18 Non-value-addedValue-added |
| Replacing old technology signal switches with higher quality switches | 179,300 | fill in the blank 13 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 14 of 18 Non-value-addedValue-added |
| Responding to customer home repair requests | 69,700 | fill in the blank 15 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 16 of 18 Non-value-addedValue-added |
| Training employees | 37,300 | fill in the blank 17 of 18 AppraisalExternal failureInternal failurePrevention | fill in the blank 18 of 18 Non-value-addedValue-added |
| Total activity cost | $830,000 |
b. Prepare a cost of quality report. Assume that sales are $3,320,000. If required, round percentages to one decimal place.
| Quality Cost Classification | Quality Cost | Percent of Total Quality Cost | Percent of Total Sales |
|---|---|---|---|
| Prevention | $Prevention | Prevention% | Prevention% |
| Appraisal | Appraisal | Appraisal% | Appraisal% |
| Internal failure | Internal failure | Internal failure% | Internal failure% |
| External failure | External failure | External failure% | External failure% |
| Total | $Total | Total% | Total% |
c. Prepare a value-added/non-value-added analysis. If required, round percentages to one decimal place.
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
