Reference no: EM13987554
Snow Technology produces transmissions for snowmobiles. Because of competitive pressures, the company was making an effort to reduce costs. As part of this effort, management implemented an activity-based management system and began focus- ing its attention on processes and activities. Purchasing was among the processes (activities) that were carefully studied. The study revealed that the number of purchase orders was a good driver for purchasing costs. During the last year, the company incurred fixed purchasing costs of $252,000 (salaries of six employees). These fixed costs provide a capacity of processing 28,800 orders (4,800 per employee at practical capacity). Management decided that the value-added standard number of purchase orders is 14,400. The actual orders processed in the most recent period were 27,600.
Required
1. Calculate the activity volume and unused capacity variances for the purchasing activity. Explain what each variance means.
2. Prepare a report that presents value-added, non-value-added, and actual costs for purchasing. Explain why highlighting the non-value-added costs is important.
3. Explain why purchasing would be viewed as a value-added activity. List all possible reasons. Also, list some possible reasons that explain why the demand for purchasing is more than the value-added standard.
4. Assume that management is able to improve the purchasing activity and reduce the demand for purchasing from 27,600 orders to 21,600 orders. What actions should now be taken regarding activity capacity management?
|
Investigate the bank of canada
: Investigate the Bank of Canada and the Bank of England and compare their authority to the Federal Reserve. What are these institutions supposed to do? What may they not do? How are they similar and how are they different? Keep your answer under two p..
|
|
Find the quantity that maximizes the firm''s profit
: Suppose a firm in a competitive market has the following cost of production: TC=50+3q^2. For a price p=60, find the quantity that maximizes the firm's profit.
|
|
Suppose a firm in a competitive market
: Suppose a firm in a competitive market has following cost of production: TC=2Q^3 - 4Q^2 + 10Q +500. For what range of prices will the firm chose to produce zero output in the short run?
|
|
Derive the differential equations that describe the motion
: Derive the differential equations that describe the motion of the system. Express the system in state space form with the displacement and velocity of both masses as the system outputs
|
|
Determining the transmissions for snowmobiles
: Snow Technology produces transmissions for snowmobiles. Because of competitive pressures, the company was making an effort to reduce costs.
|
|
What percentage of time is judy idle
: What is the probability that an arriving student (just before entering the Administrative Services Office) will find at least one other student waiting in line?
|
|
Estimate of the non-value-added cost
: 1. An estimate of the non-value-added cost caused by each activity. 2. The root cause(s) of the activity cost (such as plant layout, process design, and product design). 3. The cost reduction measure: activity elimination, activity reduction, activit..
|
|
Write an annual report - billabong
: Write an Annual Report - Billabong , Research your company and include information about your company. Include the type of business undertaken (fully reference this in your bibliography)
|
|
Process innovation or process improvement
: Discuss the potential effects of this solution on Whitley's bill-paying process. Is this process innovation or process improvement? Explain.
|