Compute the excess costs or cost savings relating to the claims processing staff. b. How would you interpret these results? What additional information would you ask for if you were making a determination of the clerical group’s processing efficiencies?
At Shadyside Insurance Company, three types of clerks work in the claims processing department: supervisors, senior clerks, and
junior clerks. The supervisors are paid $42,000 per year, the senior clerks are paid $37,000 per
year, and the junior clerks are paid $32,000 per year. For every 150,000 claims processed per
year, Shadyside plans to use one supervisor, six junior clerks, and two senior clerks.
Last year, the company processed 2 million medical claims and employed 14 supervisors, 30
senior clerks, and 83 junior clerks.
a. Compute the excess costs or cost savings relating to the claims processing staff.
b. How would you interpret these results? What additional information would you ask
for if you were making a determination of the clerical group’s processing
efficiencies?
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