Great Valley Income TaxAdvice GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, GV sends out a short survey to their customers,asking for the information required for preparing the tax statements. Based on 50 years ofexperience, GV categorizes their cases into the followinggroups: • Group 1 (new customers, easy): 15 percent ofcases • Group 2 (new customers, complex): 5 percent of cases • Group 3 (repeat customers, easy): 50 percent ofcases • Group 4 (repeat customers, complex): 30 percent ofcases Here, “easy” versus “complex” refers to the complexity of the customer’s earning situation. In order to prepare the income tax statement, GV needs to complete the followingset of activities. Processing times (and even which activities need to be carried out) depend on which group a tax statement falls into. All of the following processing times areexpressed in minutes per income tax statement. Group Filing Initial meeting Preparation Reviewby Senior accountant Writing 1 20 30 120 20 50 2 40 90 300 60 80 3 20 Nomeeting 80 5 30 4 40 Nomeeting 200 30 60 The activities are carried out by the following threepeople: • Administrative support person: filing and writing. • Senior accountant (who is also the owner): initial meeting, review by senior accountant. • Junior accountant: preparation. Assume that all three people work eight hours per day and 20 days a month. Forthe following questions, assume the product mix as described above. Assume that there are 50 income tax statements arriving each month. GV1.Which of the three persons is the bottleneck? a. Administrator b. Senior accountant c. Junior accountant GV2.What is the (implied) utilization of the senioraccountant? GV3.What is the (implied) utilization of the junioraccountant? GV4.What is the (implied) utilization of the administrative supportperson?
Great Valley Income TaxAdvice
GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, GV sends out a short survey to their customers,asking for the information required for preparing the tax statements. Based on 50 years ofexperience, GV categorizes their cases into the followinggroups:
• Group 1 (new customers, easy): 15 percent ofcases
• Group 2 (new customers, complex): 5 percent of cases
• Group 3 (repeat customers, easy): 50 percent ofcases
• Group 4 (repeat customers, complex): 30 percent ofcases
Here, “easy” versus “complex” refers to the complexity of the customer’s earning situation.
In order to prepare the income tax statement, GV needs to complete the followingset
of activities. Processing times (and even which activities need to be carried out) depend on which group a tax statement falls into. All of the following processing times areexpressed in minutes per income tax statement.
|
Group |
Filing |
Initial meeting |
Preparation |
Reviewby Senior accountant |
Writing |
|
1 |
20 |
30 |
120 |
20 |
50 |
|
2 |
40 |
90 |
300 |
60 |
80 |
|
3 |
20 |
Nomeeting |
80 |
5 |
30 |
|
4 |
40 |
Nomeeting |
200 |
30 |
60 |
The activities are carried out by the following threepeople:
• Administrative support person: filing and writing.
• Senior accountant (who is also the owner): initial meeting, review by senior accountant.
• Junior accountant: preparation.
Assume that all three people work eight hours per day and 20 days a month. Forthe following questions, assume the product mix as described above. Assume that there are 50
income tax statements arriving each month.
GV1.Which of the three persons is the bottleneck?
a. Administrator
b. Senior accountant
c. Junior accountant
GV2.What is the (implied) utilization of the senioraccountant? GV3.What is the (implied) utilization of the junioraccountant?
GV4.What is the (implied) utilization of the administrative supportperson?
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