Process activity analysis: For a service company Statewide insurance company has a process for making payments on insurance claims as follows. An activity analysis revealed the cause of these activities was as follows. Receiving claim $78,000 Adjusting claim 338,000 Paying claim 104,000 Total. $520,000 This process includes only the cost of the process the claims payments, not the actual amount of the claim payments. The adjustment activity involves verify the estimated amount of the claim and is variable to the number of claims adjusted. The process received, adjusted, and paid 6,500 claims During the period. All claims were treated identically in this process. To improve the cost of the process, management has determined that claims should be segregated into two categories. Claims under $1,000 at claims greater than $1,000 claims under 1,000 would not be adjusted but would be acceptable to insured evidence of the claim. Claims above $1,000 would be adjusted it is estimated that 75% of the claims are under $1,000 and wants us be paid without adjustment. It is also estimated that the additional effort to segregate claims what add 10% to the receiving claim activity cost. A. Develop a table showing the percent of the individual activity cost to the total process called. Round to the percent to the nearest whole number if required. Statewide insurance company individual activity cost to the total process cost Receiving claim activity cost percent of total process Adjusting claim Paying claim Total B. Determine the average total process cost for a claim payment, assuming 6,500 total claims. Round to the nearest whole dollar $ per paid claim C. Prepare a table showing the changes in activity caused as a result of the changes proposed by the management. Yeah for the amount is zero, lead the entry box blank. Use the minus side to indicate an additional cost in the last column. Statewide insurance company changes and activity cost Receiving claim $ activity calls prior to Improvement $ Adjusting claim $ Activity calls after Improvement $ Paying claim $ Activity cost saver $ Total $ D. Estimating the average cost for a claim payment, assuming that the changes proposed by management are inactive for 6,500 total claims. Round to the nearest cent. $ per paid claim

Process activity analysis: For a service company Statewide insurance company has a process for making payments on insurance claims as follows. An activity analysis revealed the cause of these activities was as follows. Receiving claim $78,000 Adjusting claim 338,000 Paying claim 104,000 Total. $520,000 This process includes only the cost of the process the claims payments, not the actual amount of the claim payments. The adjustment activity involves verify the estimated amount of the claim and is variable to the number of claims adjusted. The process received, adjusted, and paid 6,500 claims During the period. All claims were treated identically in this process. To improve the cost of the process, management has determined that claims should be segregated into two categories. Claims under $1,000 at claims greater than $1,000 claims under 1,000 would not be adjusted but would be acceptable to insured evidence of the claim. Claims above $1,000 would be adjusted it is estimated that 75% of the claims are under $1,000 and wants us be paid without adjustment. It is also estimated that the additional effort to segregate claims what add 10% to the receiving claim activity cost. A. Develop a table showing the percent of the individual activity cost to the total process called. Round to the percent to the nearest whole number if required. Statewide insurance company individual activity cost to the total process cost Receiving claim activity cost percent of total process Adjusting claim Paying claim Total B. Determine the average total process cost for a claim payment, assuming 6,500 total claims. Round to the nearest whole dollar $ per paid claim C. Prepare a table showing the changes in activity caused as a result of the changes proposed by the management. Yeah for the amount is zero, lead the entry box blank. Use the minus side to indicate an additional cost in the last column. Statewide insurance company changes and activity cost Receiving claim $ activity calls prior to Improvement $ Adjusting claim $ Activity calls after Improvement $ Paying claim $ Activity cost saver $ Total $ D. Estimating the average cost for a claim payment, assuming that the changes proposed by management are inactive for 6,500 total claims. Round to the nearest cent. $ per paid claim

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter27: Lean Principles, Lean Accounting, And Activity Analysis

Section: Chapter Questions

Problem 27.22EX

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