Seven Seas Inc provides cable TV and Internet service to the local community The activities and activity costs of Seven Seas are identified Question Content Area 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 $60,000 fill in the blank 1 of 18 AppraisalExternal failureInternal failurePreventionExternal failure fill in the blank 2 of 18 Non value addedValue addedNon value added Cable signal testing 140,000 fill in the blank 3 of 18 AppraisalExternal failureInternal failurePreventionAppraisal fill in the blank 4 of 18 Non value addedValue addedValue added Reinstalling service (installed incorrectly the first time) 40,000 fill in the blank 5 of 18 AppraisalExternal failureInternal failurePreventionExternal failure fill in the blank 6 of 18 Non value addedValue addedNon value added Repairing satellite equipment 50,000 fill in the blank 7 of 18 AppraisalExternal failureInternal failurePreventionInternal failure fill in the blank 8 of 18 Non value addedValue addedNon value added Repairing underground cable connections to the customer 25,000 fill in the blank 9 of 18 AppraisalExternal failureInternal failurePreventionExternal failure fill in the blank 10 of 18 Non value addedValue addedNon value added Replacing old technology cable with higher quality cable 175,000 fill in the blank 11 of 18 AppraisalExternal failureInternal failurePreventionPrevention fill in the blank 12 of 18 Non value addedValue addedValue added Replacing old technology signal switches with higher quality switches 150,000 fill in the blank 13 of 18 AppraisalExternal failureInternal failurePreventionPrevention fill in the blank 14 of 18 Non value addedValue addedValue added Responding to customer home repair requests 30,000 fill in the blank 15 of 18 AppraisalExternal failureInternal failurePreventionExternal failure fill in the blank 16 of 18 Non value addedValue addedNon value added Training employees 80,000 fill in the blank 17 of 18 AppraisalExternal failureInternal failurePreventionPrevention fill in the blank 18 of 18 Non value addedValue addedValue added Total activity cost $750,000 Feedback Area Feedback Correct Question Content Area b Prepare a cost of quality report Assume that sales are $3,000,000 If required, round percentages to one decimal place Quality Cost Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales Prevention Appraisal Internal failure External failure Total Feedback Area Feedback b Classify each activity as either prevention, appraisal, internal failure or external failure List the total costs of each of these four categories in a column called quality cost In a separate column, determine the percent of each quality cost as compared to the total quality costs by dividing individual quality cost categories by the total quality cost In another column, determine the percent of each quality cost classification as compared to total sales by dividing individual quality cost classes by the total sales amount Total all columns Remember that the Percent of total quality cost column should total to 100 Question Content Area c Prepare a value added non value added analysis If required, round percentages to one decimal place Category Amount Percent Value added Non value added Total c Reclassify the individual activities as value added and non value added Calculate the percentage of the total costs that are value added and those that are non value added Question Content Area d What percentage of total costs of quality are considered to be value added

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Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified. Question Content

Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified.

Question Content Area

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	$60,000	fill in the blank 1 of 18 AppraisalExternal failureInternal failurePreventionExternal failure	fill in the blank 2 of 18 Non-value-addedValue-addedNon-value-added
Cable signal testing	140,000	fill in the blank 3 of 18 AppraisalExternal failureInternal failurePreventionAppraisal	fill in the blank 4 of 18 Non-value-addedValue-addedValue-added
Reinstalling service (installed incorrectly the first time)	40,000	fill in the blank 5 of 18 AppraisalExternal failureInternal failurePreventionExternal failure	fill in the blank 6 of 18 Non-value-addedValue-addedNon-value-added
Repairing satellite equipment	50,000	fill in the blank 7 of 18 AppraisalExternal failureInternal failurePreventionInternal failure	fill in the blank 8 of 18 Non-value-addedValue-addedNon-value-added
Repairing underground cable connections to the customer	25,000	fill in the blank 9 of 18 AppraisalExternal failureInternal failurePreventionExternal failure	fill in the blank 10 of 18 Non-value-addedValue-addedNon-value-added
Replacing old technology cable with higher quality cable	175,000	fill in the blank 11 of 18 AppraisalExternal failureInternal failurePreventionPrevention	fill in the blank 12 of 18 Non-value-addedValue-addedValue-added
Replacing old technology signal switches with higher quality switches	150,000	fill in the blank 13 of 18 AppraisalExternal failureInternal failurePreventionPrevention	fill in the blank 14 of 18 Non-value-addedValue-addedValue-added
Responding to customer home repair requests	30,000	fill in the blank 15 of 18 AppraisalExternal failureInternal failurePreventionExternal failure	fill in the blank 16 of 18 Non-value-addedValue-addedNon-value-added
Training employees	80,000	fill in the blank 17 of 18 AppraisalExternal failureInternal failurePreventionPrevention	fill in the blank 18 of 18 Non-value-addedValue-addedValue-added
Total activity cost	$750,000

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Feedback

Correct

Question Content Area

b. Prepare a cost of quality report. Assume that sales are $3,000,000. If required, round percentages to one decimal place.

Quality Cost Classification	Quality Cost	Percent of Total Quality Cost	Percent of Total Sales
Prevention
Appraisal
Internal failure
External failure
Total

Feedback Area

Feedback

b. Classify each activity as either prevention, appraisal, internal failure or external failure. List the total costs of each of these four categories in a column called quality cost. In a separate column, determine the percent of each quality cost as compared to the total quality costs by dividing individual quality cost categories by the total quality cost. In another column, determine the percent of each quality cost classification as compared to total sales by dividing individual quality cost classes by the total sales amount. Total all columns. Remember that the Percent of total quality cost column should total to 100%.

Question Content Area

c. Prepare a value-added/non-value-added analysis. If required, round percentages to one decimal place.

Category	Amount	Percent
Value-added
Non-value-added
Total

c. Reclassify the individual activities as value-added and non-value-added. Calculate the percentage of the total costs that are value-added and those that are non-value-added.