Cost of Quality and Value-Added/Non-Value-Added Reports 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. Value-Added/ Activity Quality Cost Non-Value-Added Quality Control Activities Cost Classification Classification Billing error correction $18,200 External failure Non-value-added v Cable signal testing 68,400 Appraisal v Value-added Reinstalling service (installed incorrectly the first 39,200 External failure v Non-value-added v time) Repairing satellite equipment 19,000 Internal failure v Non-value-added Repairing underground cable connections to the 11,900 External failure Non-value-added customer Replacing old technology cable with higher quality 84,600 Prevention Value-added cable Replacing old technology signal switches with 96,700 Prevention Value-added higher quality switches Responding to customer home repair requests 21,900 External failure Non-value-added Training employees 20,100 Prevention Value-added Total activity cost $380,000

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