Company A maintains an accounts recevialedepartment that currently employs 8 peo

Question

   Company A maintains an accounts recevialedepartment that currently employs 8 people. They areinterested in doing an activity analysis because an outside firmhas offered to take over a protion of the activities currentlyhandled by the accounts receviale department. the 4 mainactivites handled by the department are 1. billing and recordingpayments, 2. customer service activities, 3. fianncial reportingand analysis, and 4. collecting delinquentaccounts.    The salaries paid to the department'semployees are as follows: manager                1@ $60,000 per year..............................$60,000 clerks                    5@ $30,000 per year..............................150,000 accounts specialists 2@ $40,000 peryear............................... 80,000 Total                                                      ..............................$ 290,000    The manager spends an equal amount of timesupervising the 4 main activities. The clerks spend half thetime on billing and recording payments, with the remaining timedivided between reporting activities and customer service. thespecialists spend half the time on delinquent account activitiesand the rest of the time is split between finaincial analysisactivities and customer service activities that the clerks aren'tqualified to do.    An outside Company B has proposed thatit can perform all the activities related to collecting thedelinquent accounts for $50,000 per year. Company b claimsthey can save Company A $30,000 because the $80,000 in salariespaid to the specialists who handle delinquent accounts can beeliminated. If the contract is accepted, it's estimated themanager would need to devote a quarter of the time dealing withCompany B employees. ** Using the information above, prepare an activity table ofcost analyses to calculate the labor cost for personnel devoted toeach of the 4 main actvities of the accounts receivabledepartment    Company A maintains an accounts recevialedepartment that currently employs 8 people. They areinterested in doing an activity analysis because an outside firmhas offered to take over a protion of the activities currentlyhandled by the accounts receviale department. the 4 mainactivites handled by the department are 1. billing and recordingpayments, 2. customer service activities, 3. fianncial reportingand analysis, and 4. collecting delinquentaccounts.    The salaries paid to the department'semployees are as follows: manager                1@ $60,000 per year..............................$60,000 clerks                    5@ $30,000 per year..............................150,000 accounts specialists 2@ $40,000 peryear............................... 80,000 Total                                                      ..............................$ 290,000    The manager spends an equal amount of timesupervising the 4 main activities. The clerks spend half thetime on billing and recording payments, with the remaining timedivided between reporting activities and customer service. thespecialists spend half the time on delinquent account activitiesand the rest of the time is split between finaincial analysisactivities and customer service activities that the clerks aren'tqualified to do.    An outside Company B has proposed thatit can perform all the activities related to collecting thedelinquent accounts for $50,000 per year. Company b claimsthey can save Company A $30,000 because the $80,000 in salariespaid to the specialists who handle delinquent accounts can beeliminated. If the contract is accepted, it's estimated themanager would need to devote a quarter of the time dealing withCompany B employees. ** Using the information above, prepare an activity table ofcost analyses to calculate the labor cost for personnel devoted toeach of the 4 main actvities of the accounts receivabledepartment

Explanation / Answer

                                                           Activity category                                                 .                                                             

Labor                    Billing and           Customer              financial               collecting              Total     

Category              recording dept.   service activity    reporting             delinquent          Labor

                                                                                   Andanalysis           accounts            Resoures        .

Clerks             1/2                     ¼                       ¼                    0                5 clerk@                                                                                                                                    $30,000 each

                           (50%)             (25%)                (25%)                         = 150,000

                       $75,000         $ 37,500         $ 37,500

Accounts       0                      ¼                     ¼                     ½                  2accounts

Specialists                                           (25%)             (25%)             (50%)            Specialists@

                                               $20,000            $20,000          $ 40,000         $40,000 each

                                                                                   &n

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