Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 27, Problem 27.22EX
a)
To determine
Process Activity: Process activity refers to the various of activities involved in the process of production.
Process Activity Analysis: Process activity analysis refers to the analysis of the various processes involved in the production process.
To Develop: A table showing percentage of individual activity cost to total
b)
To determine
The average total process cost per claim.
c)
To determine
To Prepare: A table showing changes in the activity cost due to the proposed improvements which also shows the changes before improvement of activity cost.
d)
To determine
The average total process cost per claim.
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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…
Process activity analysis for service Company making payments on insurance claims as follows:
Receiving claim, adjusting claim,paying claim.
Receiving claim- $78,000, adjusting claim- 338,000, paying claim-104,000 ,total $ 520,000
This process includes only the Consular processing the claim payments, not ask you about when the claim payments. The adjustment activity involves verifying and estimated amount of clean and is variable to the number of claims adjust.
The process receive adjusted, and paid 6,500 claims during the period. All claims were treated identically in this process.
To improve the cost of this process, management has determined that claims should be segregated into two categories. Claims under $1,000 claims greater than 1,000; claims under 1,000 would not be adjusted but will be accepted upon insureds xthe evidence of claims. Play Inseparable at the housing would be adjusted. It is estimated that 75% of the claims are under a thousand and would thus be paid…
Insurance
An insurance company has looked at the total salary costs of its call centre staff, which it has traditionally treated as a fixed overhead and not attempted to apportion to individual services. It has determined the following for last year:
Total Wages
Time on selling policies
Time on claims handling
Time on policy changes
Time on policy cancelling
Other activities
Call staff
£200,000
50%
30%
10%
5%
5%
Deputy managers
£100,000
10%
30%
30%
5%
25%
Managers
£80,000
5%
15%
20%
10%
50%
Last year, the company sold 100,000 new policies, handled 30,000 claims, made changes to 5,000 policies and cancelled 1,000 policies.
Calculate the staffing costs that the company must cover in selling policies, handling claims, changing policies and cancelling policies.
Chapter 27 Solutions
Financial & Managerial Accounting
Ch. 27 - Prob. 1DQCh. 27 - Prob. 2DQCh. 27 - Why is a product-oriented layout preferred by lean...Ch. 27 - Prob. 4DQCh. 27 - Prob. 5DQCh. 27 - Why would a lean manufacturer strive to produce...Ch. 27 - Prob. 7DQCh. 27 - Prob. 8DQCh. 27 - Prob. 9DQCh. 27 - Why is the direct labor cost category eliminated...
Ch. 27 - Prob. 11DQCh. 27 - Prob. 12DQCh. 27 - Prob. 13DQCh. 27 - Prob. 27.1APECh. 27 - Prob. 27.1BPECh. 27 - Prob. 27.2APECh. 27 - Lean features Which of the following are features...Ch. 27 - Lean accounting The annual budgeted conversion...Ch. 27 - Prob. 27.3BPECh. 27 - Prob. 27.4APECh. 27 - Prob. 27.4BPECh. 27 - Process activity analysis Lexter Company incurred...Ch. 27 - Prob. 27.5BPECh. 27 - Prob. 27.1EXCh. 27 - Prob. 27.2EXCh. 27 - Lean principles Active Apparel Company...Ch. 27 - Lead time analysis Palm Pals Inc. manufactures toy...Ch. 27 - Reduce setup time Hammond Inc. has analyzed the...Ch. 27 - Calculate lead time Flint Fabricators Int....Ch. 27 - Calculate lead time Williams Optical Inc. is...Ch. 27 - Prob. 27.8EXCh. 27 - Prob. 27.9EXCh. 27 - Prob. 27.10EXCh. 27 - Prob. 27.11EXCh. 27 - Lean principles for a restaurant The management of...Ch. 27 - Prob. 27.13EXCh. 27 - Prob. 27.14EXCh. 27 - Prob. 27.15EXCh. 27 - Prob. 27.16EXCh. 27 - Prob. 27.17EXCh. 27 - Prob. 27.18EXCh. 27 - Prob. 27.19EXCh. 27 - Prob. 27.20EXCh. 27 - Process activity analysis The Brite Beverage...Ch. 27 - Prob. 27.22EXCh. 27 - Prob. 27.23EXCh. 27 - Prob. 27.1APRCh. 27 - Lead time Sound Tek Inc. manufactures electronic...Ch. 27 - Lean accounting Formula One Displays Inc....Ch. 27 - Pareto chart and cost of quality report for a...Ch. 27 - Prob. 27.1BPRCh. 27 - Lead time Master Chef Appliance Company...Ch. 27 - Lean accounting Com-Tel Inc. manufactures and...Ch. 27 - Pareto chart and cost of quality report for a...Ch. 27 - Prob. 27.1CPCh. 27 - Prob. 27.2CPCh. 27 - Prob. 27.3CPCh. 27 - Prob. 27.4CP
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