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:
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.
| 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.
| 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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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
324300980, 978-0324300987
