Company A maintains an accounts receivable department that currently employs 8 people. They are interested in doing an activity analysis because an outside firm has offered to take over a protion of the activities currently handled by the accounts recieve department. The 4 main activites handled by the department are 1. billing and recording payments, 2. customer service activities, 3. fianncial reporting and analysis, and 4. collecting delinquent accounts. The salaries paid to the department's employees are as follows:
manager 1@ $60,000 per year..............................$60,000
clerks 5@ $30,000 per year..............................150,000
accounts specialists 2@ $40,000 peryear............................... 80,000
Total ..............................$ 290,000
The manager spends an equal amount of time supervising the 4 main activities. The clerks spend half the time on billing and recording payments, with the remaining time divided between reporting activities and customer service. the specialists spend half the time on delinquent account activities and the rest of the time is split between finaincial analysis activities and customer service activities that the clerks aren't qualified to do. An outside Company B has proposed that it can perform all the activities related to collecting the delinquent accounts for $50,000 per year. Company b claims they can save Company A $30,000 because the $80,000 in salaries paid to the specialists who handle delinquent accounts can be eliminated. If the contract is accepted, it's estimated the manager would need to devote a quarter of the time dealing with Company B employees. Using the information above, prepare an activity table of cost analyses to calculate the labor cost for personnel devoted to each of the 4 main actvities of the accounts receivable department.