Each month, senior managers at Vermont Wireless Technologies review cost reports for the company’s various departments. The report for the human resource (HR) group for April is as follows: 

Jason Fox, the new vice president of operations, expressed his dissatisfaction with the report at a meeting with the company president, CFO, and controller. “This report is garbage,” he began. “It shows that $80,000 is being spent on salaries in HR, but it doesn’t provide any information on what we’re paying for. We need to know the activities of HR and what they cost. How are we supposed to manage the activities without that information? At my previous company, we routinely did activity-based management studies, and they really helped us get a handle on operations and our costs.” 

Maxwell Davies, the controller, responded that he’d get to work on ABM studies right away. Two weeks later, his staff had developed the following information for the HR operation: 

Additional Information: 

The company has approximately 6,000 employees and annual employee turnover of approximately 15 percent. New employee training is a half day session and two hours are required to process paperwork for new hires and terminations. 

Required 

Comment on the insights provided by the ABM study to date. Where’s the low-hanging fruit? In other words, what activities appear to be good candidates for further study and significant cost savings?

Transcribed Image Text:

Human Resources April 2020 Salaries and benefits $80,000 Supplies Depreciation of office equipment 2,400 1,700 Total $84,100