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. Activity Cost Quality Cost Classification Value-Added/ Non-Value-Added Classification Quality Control Activities Billing error correction $24,500 External failure Non-value-added Cable signal testing 91,800 Appraisal Reinstalling service (installed incorrectly the first time) 52,600 Internal failure Repairing satellite equipment 20,400 Internal failure Repairing underground cable connections to the customer 15,900 Internal failure Replacing old technology cable with higher quality cable 115,700 Appraisal X Replacing old technology signal switches with higher quality switches 132,200 Appraisal X Responding to customer home repair requests 29,400 Internal failure Training employees 27,500 Prevention Total activity cost $510,000 Non-value-added - X X Non-value-added Non-value-added X Non-value-added Value-added Value-added X Non-value-added Non-value-added - X 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 Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales 26,100 X 5 X % Prevention Appraisal 325,800 X 64 X % Internal failure. 133,600 X 26 X % External failure 24,500 X 5 X % 510,000 Total 100 % Check My Work c. Prepare a value-addedon-value-added analysis. Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis Category Amount Percent Value-added 276,000 X Non-value-added 234,000 X Total Feedback $ 510.000 54 X % 46 X % % 100 1 X % 13 X % 5 X % 1 X % 20 %