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 Control Activities Activity Cost Quality Cost Classification Value-Added/ Non-Value-Added Classification Billing error correction $28,400 Cable signal testing 78,400 Reinstalling service (installed incorrectly the first time) 61,100 Repairing satellite equipment 34,300 Repairing underground cable connections to the customer 18,500 Replacing old technology cable with higher quality cable 98,800 Replacing old technology signal switches with higher quality switches 112,900 Responding to customer home repair requests 34,100 Training employees 23,500 Total activity cost $490,000 b. Prepare a cost of quality report. Assume that sales are $2,450,000. 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 $fill in the blank f2a4b30e4fb5f8a_1 fill in the blank f2a4b30e4fb5f8a_2% fill in the blank f2a4b30e4fb5f8a_3% Appraisal fill in the blank f2a4b30e4fb5f8a_4 fill in the blank f2a4b30e4fb5f8a_5% fill in the blank f2a4b30e4fb5f8a_6% Internal failure fill in the blank f2a4b30e4fb5f8a_7 fill in the blank f2a4b30e4fb5f8a_8% fill in the blank f2a4b30e4fb5f8a_9% External failure fill in the blank f2a4b30e4fb5f8a_10 fill in the blank f2a4b30e4fb5f8a_11% fill in the blank f2a4b30e4fb5f8a_12% Total $fill in the blank f2a4b30e4fb5f8a_13 fill in the blank f2a4b30e4fb5f8a_14% fill in the blank f2a4b30e4fb5f8a_15% c. Prepare a value-added/non-value-added analysis. Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis Category Amount Percent Value-added $fill in the blank 982667089fc7f9f_1 fill in the blank 982667089fc7f9f_2% Non-value-added fill in the blank 982667089fc7f9f_3 fill in the blank 982667089fc7f9f_4% Total $fill in the blank 982667089fc7f9f_5 fill in the blank 982667089fc7f9f_6% 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 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 $28,400 Cable signal testing 78,400 Reinstalling service (installed incorrectly the first time) 61,100 Repairing satellite equipment 34,300 Repairing underground cable connections to the customer 18,500 Replacing old technology cable with higher quality cable 98,800 Replacing old technology signal switches with higher quality switches 112,900 Responding to customer home repair requests 34,100 Training employees 23,500 Total activity cost $490,000 b. Prepare a cost of quality report. Assume that sales are $2,450,000. 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 $fill in the blank f2a4b30e4fb5f8a_1 fill in the blank f2a4b30e4fb5f8a_2% fill in the blank f2a4b30e4fb5f8a_3% Appraisal fill in the blank f2a4b30e4fb5f8a_4 fill in the blank f2a4b30e4fb5f8a_5% fill in the blank f2a4b30e4fb5f8a_6% Internal failure fill in the blank f2a4b30e4fb5f8a_7 fill in the blank f2a4b30e4fb5f8a_8% fill in the blank f2a4b30e4fb5f8a_9% External failure fill in the blank f2a4b30e4fb5f8a_10 fill in the blank f2a4b30e4fb5f8a_11% fill in the blank f2a4b30e4fb5f8a_12% Total $fill in the blank f2a4b30e4fb5f8a_13 fill in the blank f2a4b30e4fb5f8a_14% fill in the blank f2a4b30e4fb5f8a_15% c. Prepare a value-added/non-value-added analysis. Three Rivers Inc. Value-Added/Non-Value-Added Activity Analysis Category Amount Percent Value-added $fill in the blank 982667089fc7f9f_1 fill in the blank 982667089fc7f9f_2% Non-value-added fill in the blank 982667089fc7f9f_3 fill in the blank 982667089fc7f9f_4% Total $fill in the blank 982667089fc7f9f_5 fill in the blank 982667089fc7f9f_6% d. What percentage of total costs of quality are considered to be value-added?
Chapter1: Financial Statements And Business Decisions
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12.
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 Control Activities | Activity Cost | Quality Cost Classification | Value-Added/ Non-Value-Added Classification |
|
| Billing error correction | $28,400 | |||
| Cable signal testing | 78,400 | |||
| Reinstalling service (installed incorrectly the first time) | 61,100 | |||
| Repairing satellite equipment | 34,300 | |||
| Repairing underground cable connections to the customer | 18,500 | |||
| Replacing old technology cable with higher quality cable | 98,800 | |||
| Replacing old technology signal switches with higher quality switches | 112,900 | |||
| Responding to customer home repair requests | 34,100 | |||
| Training employees | 23,500 | |||
| Total activity cost | $490,000 |
b. Prepare a cost of quality report. Assume that sales are $2,450,000. 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 | $fill in the blank f2a4b30e4fb5f8a_1 | fill in the blank f2a4b30e4fb5f8a_2% | fill in the blank f2a4b30e4fb5f8a_3% |
| Appraisal | fill in the blank f2a4b30e4fb5f8a_4 | fill in the blank f2a4b30e4fb5f8a_5% | fill in the blank f2a4b30e4fb5f8a_6% |
| Internal failure | fill in the blank f2a4b30e4fb5f8a_7 | fill in the blank f2a4b30e4fb5f8a_8% | fill in the blank f2a4b30e4fb5f8a_9% |
| External failure | fill in the blank f2a4b30e4fb5f8a_10 | fill in the blank f2a4b30e4fb5f8a_11% | fill in the blank f2a4b30e4fb5f8a_12% |
| Total | $fill in the blank f2a4b30e4fb5f8a_13 | fill in the blank f2a4b30e4fb5f8a_14% | fill in the blank f2a4b30e4fb5f8a_15% |
c. Prepare a value-added/non-value-added analysis.
| Three Rivers Inc. | ||
| Value-Added/Non-Value-Added Activity Analysis | ||
| Category | Amount | Percent |
| Value-added | $fill in the blank 982667089fc7f9f_1 | fill in the blank 982667089fc7f9f_2% |
| Non-value-added | fill in the blank 982667089fc7f9f_3 | fill in the blank 982667089fc7f9f_4% |
| Total | $fill in the blank 982667089fc7f9f_5 | fill in the blank 982667089fc7f9f_6% |
d. What percentage of total costs of quality are considered to be value-added?
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