Reference no: EM13481923

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 receivable department.