19.4 ExercisesChapter 19 Costing and the Value Chain9-3ERCISE 19.4wity-Based Managementservice activities, (3) financial reporting and analysis, and (4) collecting delinquent accounteThe salaries paid to the department's employees are as follows.$ 65,000019-7, LOManager, 1 @ $65,000 per yearClerks, 5 @ $30,000 per yearKERCIS150,000Ct of Q76,000Account specialists, 2 @ $38,000 per year$291,000TotalIt is estimated that the manager of the Accounts Receivable Department spends an equal amountof her time supervising the four main activities. The clerks spend approximately half of their timeon billing and recording payments. Their remaining time is divided equally between reportingactivities and customer service. The two account specialists spend half of their time on delinquentaccount activities, and the rest of their time is split equally between financial analysis activities andcustomer service activities that the clerks are not qualified to perform.Paypro, Inc., has proposed that it can perform all the activities related to collecting delin-quent accounts for a fee of $50,000 per year. The manager of Paypro argues that Blake can save$26,000 because the $76,000 in salaries paid to the specialists who currently handle all delinquentaccounts can be eliminated. If the contract is accepted, it is estimated that the manager of theAccounts Receivable Department would need to devote a quarter of her time to dealing with Pay"pro employees.a. Using the information given, prepare an activity table such as that in Exhibit 19-3 to calculatethe labor cost for personnel devoted to each of the four main activities of the Accounts Recenable Department.b. Should Blake accept Paypro's offer to take over its delinquent account activities:LO19-2EXERO

Activity based costing (ABC) is the costing method which allocates the overheads (activity…

Chapter 19 Costing and the Value Chain Blake Furniture, Inc., maintains an Accounts Receivable Department that currently employs eight people. Blake is interested in doing an activity analysis because an outside firm has offered to take over a portion of the activities currently handled by the Accounts Receivable Department. The four main activities handled by the department are (1) billing and recording payments, (2) customer service activities, (3) financial reporting and analysis, and (4) collecting delinquent accounte The salaries paid to the department's employees are as follows. CISE 19.4 y-Based Management

Chapter 19 Costing and the Value Chain Blake Furniture, Inc., maintains an Accounts Receivable Department that currently employs eight people. Blake is interested in doing an activity analysis because an outside firm has offered to take over a portion of the activities currently handled by the Accounts Receivable Department. The four main activities handled by the department are (1) billing and recording payments, (2) customer service activities, (3) financial reporting and analysis, and (4) collecting delinquent accounte The salaries paid to the department's employees are as follows. CISE 19.4 y-Based Management

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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