Recent competitive pressures have caused National Insurance Company to examine policies regarding personnel planning. As a start, the company has decided to experiment with and develop a time-driven ABC model for its claims processing center. A study of this support center Indicates the following three primary activities: remote processing of customer claims, 0.5 hour; onsite processing of customer claims, 1.0 hour, and updating/maintaining customer records, 0.2 hour. Onsite processing is required for larger claims, while remote processing is done for smaller claims. (For onsite processing, assume-for simplicity-that the claims processors use their own automobiles.) All claims will require that the customers' records be updated. The claims processing center currently employs three full-time employees. Total annual cost of the center (salaries, depreciation, utilities, etc.) is estimated at $255,000. The net amount of available personnel time per year for this department is approximately 5,000 hours. Required 3. Assume that the budgeted number of offsite (I.e., remote) claims Is 1,900 for the year. What is the budgeted claims-processing support cost to serve this subset of customers? 4. Assume that the budgeted number of onsite (I.e., large) claims for the coming year is 2,900. What is the budgeted claims-processing support cost for this subset of customers? 5. Assume now that the customer mix reflected in requirements 2 and 3 were to change as follows: number of remote cases, 2,700; number of onsite claims, 2,000. How much labor processing time would be needed to service this revised level of service demand? What support cost would be budgeted for each class of customer? Complete this question by entering your answers in the tabs below. Req 3 and 4 Req 5
Recent competitive pressures have caused National Insurance Company to examine policies regarding personnel planning. As a start, the company has decided to experiment with and develop a time-driven ABC model for its claims processing center. A study of this support center Indicates the following three primary activities: remote processing of customer claims, 0.5 hour; onsite processing of customer claims, 1.0 hour, and updating/maintaining customer records, 0.2 hour. Onsite processing is required for larger claims, while remote processing is done for smaller claims. (For onsite processing, assume-for simplicity-that the claims processors use their own automobiles.) All claims will require that the customers' records be updated. The claims processing center currently employs three full-time employees. Total annual cost of the center (salaries, depreciation, utilities, etc.) is estimated at $255,000. The net amount of available personnel time per year for this department is approximately 5,000 hours. Required 3. Assume that the budgeted number of offsite (I.e., remote) claims Is 1,900 for the year. What is the budgeted claims-processing support cost to serve this subset of customers? 4. Assume that the budgeted number of onsite (I.e., large) claims for the coming year is 2,900. What is the budgeted claims-processing support cost for this subset of customers? 5. Assume now that the customer mix reflected in requirements 2 and 3 were to change as follows: number of remote cases, 2,700; number of onsite claims, 2,000. How much labor processing time would be needed to service this revised level of service demand? What support cost would be budgeted for each class of customer? Complete this question by entering your answers in the tabs below. Req 3 and 4 Req 5
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 2TIF
Related questions
Question
B1.
Account
Transcribed Image Text:Req 3 and 4
Req 5
3. Assume that the budgeted number of offsite (i.e., remote) claims is 1,900 for the year. What is the budgeted claims-
processing support cost to serve this subset of customers?
4. Assume that the budgeted number of onsite (i.e., large) claims for the coming year is 2,900. What is the budgeted claims-
processing support cost for this subset of customers?
(Round "Processing time/claim" and "Customer record maintenance/claim" answers to 2 decimal places.)
Claim Information
Processing time/claim
Customer record maintenance/claim
Total time per claim
x Number of claims
Total hours needed
x Capacity cost per hour
Budgeted support costs
Remote
Processing
0.00
< Req 3 and 4
On-site
Processing
0.00
Total
Req 5 >
0
Show less
Transcribed Image Text:Recent competitive pressures have caused National Insurance Company to examine policies regarding personnel planning. As a start,
the company has decided to experiment with and develop a time-driven ABC model for its claims processing center.
A study of this support center indicates the following three primary activities: remote processing of customer claims, 0.5 hour; onsite
processing of customer claims, 1.0 hour, and updating/maintaining customer records, 0.2 hour. Onsite processing is required for larger
claims, while remote processing is done for smaller claims. (For onsite processing, assume-for simplicity-that the claims processors
use their own automobiles.) All claims will require that the customers' records be updated.
The claims processing center currently employs three full-time employees. Total annual cost of the center (salaries, depreciation,
utilities, etc.) is estimated at $255,000. The net amount of available personnel time per year for this department is approximately 5,000
hours.
Required
3. Assume that the budgeted number of offsite (I.e., remote) claims is 1,900 for the year. What is the budgeted claims-processing
support cost to serve this subset of customers?
4. Assume that the budgeted number of onsite (I.e., large) claims for the coming year is 2,900. What is the budgeted claims-processing
support cost for this subset of customers?
5. Assume now that the customer mix reflected in requirements 2 and 3 were to change as follows: number of remote cases, 2,700;
number of onsite claims, 2,000. How much labor processing time would be needed to service this revised level of service demand?
What support cost would be budgeted for each class of customer?
Complete this question by entering your answers in the tabs below.
Req 3 and 4
Req 5
Assume now that the customer mix reflected in requirements 2 and 3 were to change as follows: number of remote cases,
2,700; number of onsite claims, 2,000. How much labor processing time would be needed to service this revised level of
service demand? What support cost would be budgeted for each class of customer? (Round "Processing time/claim" and
"Customer record maintenance/claim" answers to 2 decimal places.)
Claim Information
Processing time/claim
Customer record maintenance/claim
Total time per claim
x Number of claims
Total hours needed
x Capacity cost per hour
Budgeted support costs
Remote
Processing
0.00
On-site
Processing
0.00
Total
0
Show less
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