Managerial Accounting
Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
Question
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Chapter 13, Problem 21E

a.

To determine

Prepare a table showing percentage of individual activity cost to total process cost.

b.

To determine

Calculate the average process cost per payment, assuming there are 10,000 payments.

c.

To determine

Prepare a table showing the improvements in the activity costs as a result of the changes proposed by management.

d.

To determine

Calculate the average process cost per payment, assuming there are 10,000 payments.

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Process Activity Analysis The procurement process for Jarom Wholesale Company includes a series of activities that transforms a materials requisition into a vendor payment. The process begins with a request for materials. The requesting department prepares and sends a materials request form to the Purchasing Department. The Purchasing Department then places a request for a quote to vendors. Vendors prepare bids in response to the request for a quote. A vendor is selected based on the lowest bid. A purchase order to the low-bid vendor is prepared. The vendor delivers the materials to the company, whereupon a receiving ticket is prepared. Payment to the vendor is authorized if the materials request form, receiving ticket, and vendor invoice are in agreement. These three documents fail to agree 40% of the time, initiating effort to reconcile the differences. Once the three documents agree, a payment is made. The process can be diagrammed as follows: An activity analysis indicated the…
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Managerial Accounting

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