Question
In: Accounting
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Three Rivers Inc. provides cable TV...
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 | $29,800 | External failure | Non-value-added | |
| Cable signal testing | 120,700 | Appraisal | Value-added | |
| Reinstalling service (installed incorrectly the first time) | 64,100 | External failure | Non-value-added | |
| Repairing satellite equipment | 49,700 | Internal failure | Non-value-added | |
| Repairing underground cable connections to the customer | 19,400 | External failure | Non-value-added | |
| Replacing old technology cable with higher quality cable | 164,000 | Prevention | Value-added | |
| Replacing old technology signal switches with higher quality switches | 187,400 | Prevention | Value-added | |
| Responding to customer home repair requests | 35,800 | External failure | Non-value-added | |
| Training employees | 39,100 | Prevention | Value-added | |
| Total activity cost | $710,000 | |||
b. Prepare a cost of quality report. Assume that sales are $3,550,000. 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 |
| Prevention | $ | % | % |
| Appraisal | % | % | |
| Internal failure | % | % | |
| External failure | % | % | |
| Total | $ | % | % |
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 | % | |
| Total | $ | % |
d. What percentage of total costs of quality
are considered to be value-added?
72.0%
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Three Rivers Inc. provides cable TV...
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
$33,100
Cable signal testing
79,800
Reinstalling service (installed incorrectly the first
time)
71,100...
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Three Rivers Inc. provides cable TV...
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
$41,200
External failure
Non-value-added
Cable signal testing
99,400
Appraisal
Value-added
Reinstalling service (installed...
Cost of Quality and Value-Added/Non-Value-Added Reports for a Service Company Three Rivers Inc. provides cable TV...
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
$27,100
External failure
Non-value-added
Cable signal testing
94,400
Appraisal
Value-added
Reinstalling service (installed...
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and...
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
$21,700
External failure
Non-value-added
Cable signal testing
49,000
Appraisal
Value-added
Reinstalling service (installed incorrectly the first
time)
46,700
External failure
Non-value-added
Repairing satellite...
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and...
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
$48,600
Cable signal testing
114,000
Reinstalling service (installed incorrectly the first
time)
104,600
Repairing satellite equipment
53,200
Repairing underground cable connections to the...
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and...
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:
1
Activities
Activity Cost
2
Billing error correction
$33,000.00
3
Cable signal testing
105,000.00
4
Reinstalling service (installed incorrectly the first time)
29,000.00
5
Repairing satellite equipment
35,000.00
6
Repairing underground cable connections to the customer
15,000.00
7
Replacing old technology cable with higher quality cable
164,000.00
8
Replacing old technology signal switches with higher...
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and...
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 $24,800 Cable signal
testing 69,000 Reinstalling service (installed incorrectly the
first time) 53,400 Repairing satellite equipment 18,400 Repairing
underground cable connections to the...
Digital River Inc. provides cable TV and Internet service to the local community. The activities and...
Digital River Inc. provides cable TV and Internet service to the
local community. The activities and activity costs of Digital Light
are identified as follows:
1
Activities
Activity Cost
2
Billing error correction
$30,000.00
3
Cable signal testing
86,400.00
4
Reinstalling service (installed incorrectly the first time)
29,000.00
5
Repairing satellite equipment
32,400.00
6
Repairing underground cable connections to the customer
19,000.00
7
Replacing old technology cable with higher quality cable
170,000.00
8
Replacing old technology signal switches with higher...
Comcast, Inc. (the cable tv company) is trying to determine the Lifetime Value of its customers....
Comcast, Inc. (the cable tv company) is trying to determine the
Lifetime Value of its customers. Here are some facts related to
Comcast customers: - A study of historical sales data reveals that
the average customer brings in about $2500 of sales revenues each
year. - A study of historical cost data reveals that the average
cost to service and retain a customer is about $700 per year. -
Comcast spends about $500 to acquire a new customer, on average....
Non-Value-Added Activities: Non-Value-Added Cost Thayne Company has 28 clerks that work in its Accounts Payable Department....
Non-Value-Added Activities: Non-Value-Added Cost
Thayne Company has 28 clerks that work in its Accounts Payable
Department. A study revealed the following activities and the
relative time demanded by each activity:
Activities
Percentage of Clerical Time
Comparing purchase orders and receiving orders and
invoices
10%
Resolving discrepancies among the three documents
73
Preparing checks for suppliers
7
Making journal entries and mailing checks
10
The average salary of a clerk is $40,100.
Required:
Classify the four activities as value-added or non-value-added,...
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