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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.

Quality Control Activities Activity Cost Quality Cost Classification Value-Added/ Non-Value-Added Classification
Billing error correction $44,000

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Cable signal testing 127,800

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Reinstalling service (installed incorrectly the first time) 94,600

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Repairing satellite equipment 42,600

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Repairing underground cable connections to the customer 28,600

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Replacing old technology cable with higher quality cable 134,200

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Replacing old technology signal switches with higher quality switches 153,400

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Responding to customer home repair requests 52,900

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Training employees 31,900

AppraisalExternal failureInternal failurePrevention

Non-value-addedValue-added

Total activity cost $710,000

b. Prepare a cost of quality report. Assume that sales are $2,840,000. If required, round percentages to one decimal place.

Three Rivers Inc. Cost of Quality Report
Quality Cost Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales
Prevention $fill in the blank efdecd07304501f_1 fill in the blank efdecd07304501f_2% fill in the blank efdecd07304501f_3%
Appraisal fill in the blank efdecd07304501f_4 fill in the blank efdecd07304501f_5% fill in the blank efdecd07304501f_6%
Internal failure fill in the blank efdecd07304501f_7 fill in the blank efdecd07304501f_8% fill in the blank efdecd07304501f_9%
External failure fill in the blank efdecd07304501f_10 fill in the blank efdecd07304501f_11% fill in the blank efdecd07304501f_12%
Total $fill in the blank efdecd07304501f_13 fill in the blank efdecd07304501f_14% fill in the blank efdecd07304501f_15%

c. Prepare a value-added/non-value-added analysis.

Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis
Category Amount Percent
Value-added $fill in the blank 695ae9fdd03cffc_1 fill in the blank 695ae9fdd03cffc_2%
Non-value-added fill in the blank 695ae9fdd03cffc_3 fill in the blank 695ae9fdd03cffc_4%
Total $fill in the blank 695ae9fdd03cffc_5 fill in the blank 695ae9fdd03cffc_6%

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