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Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows:
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: a. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Value-Added/ Non-Value-Added Classification Quality Control Activities Activity Cost Quality Cost Classification Billing error correction $24,500 Cable signal testing 91,800 Reinstalling service (installed incorrectly the first 52,600 time) Repairing satellite equipment 20,400 Repairing underground cable connections to the 15,900 customer Replacing old technology cable with higher 115,700 quality cable Replacing old technology signal switches with 132,200 higher quality switches Responding to customer home repair requests 29,400 Training employees 27,500 Total activity cost $510,000 b. Prepare a cost of quality report. Assume that sales are $2,550,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Quality Cost Percent of Total Quality Cost Classification Quality Cost Percent of Total Sales Prevention % % Appraisal % % Internal failure % % External failure % % % % Total c. Prepare a value-added/non-value-added analysis. Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis Category Value-added Non-value-added Total Amount Percent % % % d. What percentage of total costs of quality are considered to be value-added
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