2. The following information is known about the purchasing department of Busy Company Traditional General Ledger...
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2. The following information is known about the purchasing department of Busy Company Traditional General Ledger Salaries Utilities Depreciation Supplies Insurance $240,000 $35,000 $90,000 $30,000 $5,000 Total $400,000 ABC Activities Ordering goods Verifying orders Expediting orders Creating reports Supplier relations Total $170,000 $55,000 $45,000 $40,000 $90,000 $400,000 a. Identify several non-value-added activities in the purchasing department. b. Poor coordination of activities and poor scheduling may create the need to expedite orders. Expediting is often considered a non-value-added cost because customers do not want to pay to expedite (speed up) their orders when the items were not properly purchased originally. What might be some other specific causes of problems that would require expediting? c. Which insights and potential decisions would be possible with the ABC activities information provided that is not available with the traditional reporting of the general ledger accounts for the purchasing department? Be specific. 2. The following information is known about the purchasing department of Busy Company Traditional General Ledger Salaries Utilities Depreciation Supplies Insurance $240,000 $35,000 $90,000 $30,000 $5,000 Total $400,000 ABC Activities Ordering goods Verifying orders Expediting orders Creating reports Supplier relations Total $170,000 $55,000 $45,000 $40,000 $90,000 $400,000 a. Identify several non-value-added activities in the purchasing department. b. Poor coordination of activities and poor scheduling may create the need to expedite orders. Expediting is often considered a non-value-added cost because customers do not want to pay to expedite (speed up) their orders when the items were not properly purchased originally. What might be some other specific causes of problems that would require expediting? c. Which insights and potential decisions would be possible with the ABC activities information provided that is not available with the traditional reporting of the general ledger accounts for the purchasing department? Be specific.
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Related Book For
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra
Posted Date:
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