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Cameron University ACCT 5243 Chapter 19 Required Homework 1. Blake Furniture, Inc., maintains an Accounts Receivable Department that currently employs eight people. Blake is interested in doing an activity analysis because an outside firm has offered to take over a portion of the activities currently handled by the Accounts ...[Show More]

Cameron University

ACCT 5243
Chapter 19 Required Homework 1. Blake Furniture, Inc., maintains an Accounts Receivable Department that currently employs eight people. Blake is interested in doing an activity analysis because an outside firm has offered to take over a portion of the activities currently handled by the Accounts Receivable Department. The four main activities handled by the department are (1) billing and recording payments, (2) customer service activities, (3) financial reporting and analysis, and (4) collecting delinquent accounts. The salaries paid to the department's employees are as follows: Manager, 1 @ $65,000 per year $ 65,000 Clerks, 5 @ $30,000 per year 150,000 Account specialists, 2 @ $38,000 per year 76,000 Total $ 291,000 It is estimated that the manager of the Accounts Receivable Department spends an equal amount of her time supervising the four main activities. The clerks spend approximately half of their time on billing and recording payments. Their remaining time is divided equally between reporting activities and customer service. The two account specialists spend half of their time on delinquent account activities, and the rest of their time is split equally between financial analysis activities and customer service activities that the clerks are not qualified to perform. Paypro, Inc., has proposed that it can perform all the activities related to collecting delinquent accounts for a fee of $50,000 per year. The manager of Paypro argues that Blake can save $26,000 because the $76,000 in salaries paid to the specialists who currently handle all delinquent accounts can be eliminated. If the contract is accepted, it is estimated that the manager of the Accounts Receivable Department would need to

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