Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified. Question Content Area 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 VA/NVA Classification Billing error correction $60,000 fill in the blank 1 of 18 fill in the blank 2 of 18 Cable signal testing 140,000 fill in the blank 3 of 18 fill in the blank 4 of 18 Reinstalling service (installed incorrectly the first time) 40,000 fill in the blank 5 of 18 fill in the blank 6 of 18 Repairing satellite equipment 50,000 fill in the blank 7 of 18 fill in the blank 8 of 18 Repairing underground cable connections to the customer 25,000 fill in the blank 9 of 18 fill in the blank 10 of 18 Replacing old technology cable with higher quality cable 175,000 fill in the blank 11 of 18 fill in the blank 12 of 18 Replacing old technology signal switches with higher quality switches 150,000 fill in the blank 13 of 18 fill in the blank 14 of 18 Responding to customer home repair requests 30,000 fill in the blank 15 of 18 fill in the blank 16 of 18 Training employees 80,000 fill in the blank 17 of 18 fill in the blank 18 of 18 Total activity cost $750,000 Question Content Area b. Prepare a cost of quality report. Assume that sales are $3,000,000. If required, round percentages to one decimal place. blankSeven Seas Inc.Cost of Quality Report Quality Cost Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales Prevention $Prevention Prevention% Prevention% Appraisal Appraisal Appraisal% Appraisal% Internal failure Internal failure Internal failure% Internal failure% External failure External failure External failure% External failure% Total $Total Total% Total% Question Content Area c. Prepare a value-added/non-value-added analysis. If required, round percentages to one decimal place. blankSeven Seas Inc.Value-Added/Non-Value-Added Activity Analysis Category Amount Percent Value-added $Value-added Value-added% Non-value-added Non-value-added Non-value-added% Total $Total Total% Question Content Area d. What percentage of total costs of quality are considered to be value-added?

Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Seven Seas Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Seven Seas are identified. Question Content Area 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 VA/NVA Classification Billing error correction $60,000 fill in the blank 1 of 18 fill in the blank 2 of 18 Cable signal testing 140,000 fill in the blank 3 of 18 fill in the blank 4 of 18 Reinstalling service (installed incorrectly the first time) 40,000 fill in the blank 5 of 18 fill in the blank 6 of 18 Repairing satellite equipment 50,000 fill in the blank 7 of 18 fill in the blank 8 of 18 Repairing underground cable connections to the customer 25,000 fill in the blank 9 of 18 fill in the blank 10 of 18 Replacing old technology cable with higher quality cable 175,000 fill in the blank 11 of 18 fill in the blank 12 of 18 Replacing old technology signal switches with higher quality switches 150,000 fill in the blank 13 of 18 fill in the blank 14 of 18 Responding to customer home repair requests 30,000 fill in the blank 15 of 18 fill in the blank 16 of 18 Training employees 80,000 fill in the blank 17 of 18 fill in the blank 18 of 18 Total activity cost $750,000 Question Content Area b. Prepare a cost of quality report. Assume that sales are $3,000,000. If required, round percentages to one decimal place. blankSeven Seas Inc.Cost of Quality Report Quality Cost Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales Prevention $Prevention Prevention% Prevention% Appraisal Appraisal Appraisal% Appraisal% Internal failure Internal failure Internal failure% Internal failure% External failure External failure External failure% External failure% Total $Total Total% Total% Question Content Area c. Prepare a value-added/non-value-added analysis. If required, round percentages to one decimal place. blankSeven Seas Inc.Value-Added/Non-Value-Added Activity Analysis Category Amount Percent Value-added $Value-added Value-added% Non-value-added Non-value-added Non-value-added% Total $Total Total% Question Content Area d. What percentage of total costs of quality are considered to be value-added?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question Content Area

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	VA/NVA Classification
Billing error correction	$60,000	fill in the blank 1 of 18	fill in the blank 2 of 18
Cable signal testing	140,000	fill in the blank 3 of 18	fill in the blank 4 of 18
Reinstalling service (installed incorrectly the first time)	40,000	fill in the blank 5 of 18	fill in the blank 6 of 18
Repairing satellite equipment	50,000	fill in the blank 7 of 18	fill in the blank 8 of 18
Repairing underground cable connections to the customer	25,000	fill in the blank 9 of 18	fill in the blank 10 of 18
Replacing old technology cable with higher quality cable	175,000	fill in the blank 11 of 18	fill in the blank 12 of 18
Replacing old technology signal switches with higher quality switches	150,000	fill in the blank 13 of 18	fill in the blank 14 of 18
Responding to customer home repair requests	30,000	fill in the blank 15 of 18	fill in the blank 16 of 18
Training employees	80,000	fill in the blank 17 of 18	fill in the blank 18 of 18
Total activity cost	$750,000

Question Content Area

b. Prepare a cost of quality report. Assume that sales are $3,000,000. If required, round percentages to one decimal place.

blankSeven Seas Inc.Cost of Quality Report

Quality Cost Classification	Quality Cost	Percent of Total Quality Cost	Percent of Total Sales
Prevention	$Prevention	Prevention%	Prevention%
Appraisal	Appraisal	Appraisal%	Appraisal%
Internal failure	Internal failure	Internal failure%	Internal failure%
External failure	External failure	External failure%	External failure%
Total	$Total	Total%	Total%

Question Content Area

c. Prepare a value-added/non-value-added analysis. If required, round percentages to one decimal place.

blankSeven Seas Inc.Value-Added/Non-Value-Added Activity Analysis

Category	Amount	Percent
Value-added	$Value-added	Value-added%
Non-value-added	Non-value-added	Non-value-added%
Total	$Total	Total%

Question Content Area

d. What percentage of total costs of quality are considered to be value-added?

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