Question
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:
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 | Value-Added/ Non-Value-Added Classification | |
| Billing error correction | $39,000 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Cable signal testing | 120,000 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Reinstalling service (installed incorrectly the first time) | 83,900 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Repairing satellite equipment | 45,000 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Repairing underground cable connections to the customer | 25,400 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Replacing old technology cable with higher quality cable | 163,800 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Replacing old technology signal switches with higher quality switches | 187,200 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Responding to customer home repair requests | 46,700 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Training employees | 39,000 | AppraisalExternal failureInternal failurePrevention | Non-value-addedValue-added | |
| Total activity cost | $750,000 | |||
Question Content Area
b. Prepare a cost of quality report. Assume that sales are $3,750,000. If required, round percentages to one decimal place.
| Quality Cost Classification | Quality Cost | Percent of Total Quality Cost | Percent of Total Sales |
| Prevention | $fill in the blank 54874dff8057054_1 | fill in the blank 54874dff8057054_2% | fill in the blank 54874dff8057054_3% |
| Appraisal | fill in the blank 54874dff8057054_4 | fill in the blank 54874dff8057054_5% | fill in the blank 54874dff8057054_6% |
| Internal failure | fill in the blank 54874dff8057054_7 | fill in the blank 54874dff8057054_8% | fill in the blank 54874dff8057054_9% |
| External failure | fill in the blank 54874dff8057054_10 | fill in the blank 54874dff8057054_11% | fill in the blank 54874dff8057054_12% |
| Total | $fill in the blank 54874dff8057054_13 | fill in the blank 54874dff8057054_14% | fill in the blank 54874dff8057054_15% |
Question Content Area
c. Prepare a value-added/non-value-added analysis.
| Category | Amount | Percent |
| Value-added | $fill in the blank f81fcbf9bf89f8c_1 | fill in the blank f81fcbf9bf89f8c_2% |
| Non-value-added | fill in the blank f81fcbf9bf89f8c_3 | fill in the blank f81fcbf9bf89f8c_4% |
| Total | $fill in the blank f81fcbf9bf89f8c_5 | fill in the blank f81fcbf9bf89f8c_6% |
Question Content Area
d. What percentage of total costs of quality are considered to be value-added?
52.0%16.0%68.0%None of these options are correct.
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Principles Of Cost Accounting
Authors: Edward J. Vanderbeck
15th Edition
978-0840037039, 0840037031
