Comment on each of the following independent scenarios. Apply the ABC and ABM techniques of focusing on processes and identifying non–value-added activities that could be either eliminated or made more efficient. Indicate how the activities could be done differently.

a. In a doctor’s office, each patient manually fills out forms and usually waits 30 minutes before seeing the doctor. The assistant then types in the patient information each time. Usually, one patient each day forgets to come for their appointment.

b. The purchasing department has learned that negotiating with suppliers, updating the database, issuing purchase orders, and handling complaints from various internal departments about materials not being delivered on time or wrong items being shipped are costing the company about $30,000 each month, or 5% of sales.

c. The consumer complaint department conducted an ABM project and reported that the customer returns, warranty work, and recalls averaged approximately 12% of sales.

d. A company makes various types of computers, ranging from basic to fully customized and varying significantly in complexity and volume. As such, it uses the following activity drivers: purchasing dollars for purchasing activities, number of units for research and product design, and sales dollars for all customer-related costs.

e. The production department indicated that it was difficult to produce the right quantity of goods because often the workers and machines were idle and waiting for parts and materials to arrive until the purchase orders could be expedited. At other times, many items were overproduced because salespeople overestimated the sales units. Management concluded that these problems could not be avoided and that no changes needed to be made.

f. Top management is skeptical of starting an ABC project because the budget is tight this year. The controller suggested that the ABC team look at the general ledger and directly assign the costs to the product or service lines according to the relative sales margins rather than spending a lot of time mapping all the processes and interviewing mid-level operational managers.

g. At a local grocery store, the owner observed that customers were waiting a long time to check out. He reprimanded the cashier and told him to scan items faster. When the cashier was not able to reduce the time spent scanning items, the owner fired him. The same process was repeated with a new employee. The employees consistently complained that products did not have prices or that customers questioned the prices that were rung up.

h. In a neighborhood restaurant, each order is placed on a ticket, which is given to the kitchen and then entered into a point-of-sale computer for internal control purposes. Each waitperson is assigned three specific tables at one time and only providers service to those tables.

i. A law firm assigns all indirect costs according to billable hours of the lawyers. Customers with simple cases have complained of being overcharged, and some have even taken their business elsewhere. Fortunately, customers with complex cases that require a lot of contract negotiations and special support by paralegals and assistants other than the lawyers have not complained and seem happy with the bills.