Cost Of Quality And Value Added Non Value Added Reports For A Service Company Three Rivers Inc Provides Cable Tv And In 1 (48.15 KiB) Viewed 40 times
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company 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 Cost Classification Value-Added/ Non-Value-Added Classification Activity Cost $37,600 Quality Control Activities Billing error correction External failure Non-value-added Cable signal testing 79,800 Appraisal ✓ Value-added Reinstalling service (installed incorrectly the first time) 80,900 External failure ✓ Non-value-added Repairing satellite equipment 17,100 Internal failure ✓ Non-value-added Repairing underground cable connections. to the customer 24,500 External failure ✔ Non-value-added Replacing old technology cable with higher quality cable 119,700 Prevention Value-added Replacing old technology signal switches with higher quality switches 136,800 Prevention Value-added Responding to customer home repair requests ✓ Non-value-added 45,100 28,500 Prevention Training employees Value-added Total activity cost Feedback ✓ Check My Work Correct $570,000 External failure ✓ ✓ ✓ ✓✓ ✓ ✓ ✓
b. Prepare a cost of quality report. Assume that sales are $2,850,000. If required, round percentages to one decimal place. Three Rivers Inc. Cost of Quality Report Quality Cost Classification Percent of Total Quality Cost Percent of Total Sales Prevention % % Appraisal % % Internal failure % % External failure % % Total % % Quality Cost $
c. 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 8 Total Feedback ✓ Check My Work c. Reclassify the individual activities as value-added and non-value-added. Calculate the percentage of the total costs that are value-added and those that are non-value-added. d. What percentage of total costs of quality are considered to be value-added? %
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