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	$34,700		External failure	Non-value-added
Cable signal testing	105,400		Appraisal	Value-added
Reinstalling service (installed incorrectly the first time)	74,600		External failure	Non-value-added
Repairing satellite equipment	43,400		Internal failure	Non-value-added
Repairing underground cable connections to the customer	22,600		External failure	Non-value-added
Replacing old technology cable with higher quality cable	125,000		Prevention	Value-added
Replacing old technology signal switches with higher quality switches	142,800		Prevention	Value-added
Responding to customer home repair requests	41,700		External failure	Non-value-added
Training employees	29,800		Prevention	Value-added
Total activity cost	$620,000

Prepare a cost of quality report. Assume that sales are $2,480,000. 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
Appraisal
Internal failure
External failure
Total

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

Three Rivers Inc.
Value-Added/Non-Value-Added Activity Analysis
Category	Amount	Percent
Value-added
Non-value-added
Total