Carasco Associates prepares architectural drawings to conform to local structural-safety codes. (Click the icon to view the income statement) (Click the icon to view the percentage of time spent on activities.) Assume administrative and support costs vary with professional-labor costs. Consider each requirement independently. Read the requirements. Peamicament a m b of the database A2047 value added a value added, or in the araw area between 2 Explain your Anware brieflu. What actions can Carasco take to reduce it costs? i Data Table X led Requirements - X i Data Table Its income statement for 2017 is as follows: The percentage of time spent by professional staff on various activities follows: $ 639,100 Revenues Salaries of professional staff (7.700 hours x $48 per hour) Travel 369,600 18,000 151,536 539,136 99.964 Administrative and support costs 1. How much of the total costs in 2017 are value-added, non-value-added, or in the gray area between? Explain your answers briefly. What actions can Carasco take to reduce its costs? 2. What are the consequences of misclassifying a non-value-added cost as a value-added cost? When in doubt, would you classify a cost as a value-added or non-value-added cost? Explain briefly. 3. Suppose Carasco could eliminate all errors so that it did not need to spend any time making corrections and, as a result, could proportionately reduce professional-labor costs. Calculate Carasco's operating income for 2017. 4. Now suppose Carasco could take on as much business as it could complete, but it could not add more professional staff. Assume Carasco could eliminate all errors so that it does not need to spend any time correcting errors. Assume Carasco could use the time saved to increase revenues proportionately. Assume travel costs will remain at $18,000. Calculate Carasco's operating income for 2017. Making calculations and preparing drawings for clients Checking calculations and drawings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) Total costs $ Operating income 100 % Total Print Done Print Done Print Done Carasco Associates prepares architectural drawings to conform to local structural-safety codes. (Click the icon to view the income statement) (Click the icon to view the percentage of time spent on activities.) Assume administrative and support costs vary with professional-labor costs. Consider each requirement independently. Read the requirements. Peamicament a m b of the database A2047 value added a value added, or in the araw area between 2 Explain your Anware brieflu. What actions can Carasco take to reduce it costs? i Data Table X led Requirements - X i Data Table Its income statement for 2017 is as follows: The percentage of time spent by professional staff on various activities follows: $ 639,100 Revenues Salaries of professional staff (7.700 hours x $48 per hour) Travel 369,600 18,000 151,536 539,136 99.964 Administrative and support costs 1. How much of the total costs in 2017 are value-added, non-value-added, or in the gray area between? Explain your answers briefly. What actions can Carasco take to reduce its costs? 2. What are the consequences of misclassifying a non-value-added cost as a value-added cost? When in doubt, would you classify a cost as a value-added or non-value-added cost? Explain briefly. 3. Suppose Carasco could eliminate all errors so that it did not need to spend any time making corrections and, as a result, could proportionately reduce professional-labor costs. Calculate Carasco's operating income for 2017. 4. Now suppose Carasco could take on as much business as it could complete, but it could not add more professional staff. Assume Carasco could eliminate all errors so that it does not need to spend any time correcting errors. Assume Carasco could use the time saved to increase revenues proportionately. Assume travel costs will remain at $18,000. Calculate Carasco's operating income for 2017. Making calculations and preparing drawings for clients Checking calculations and drawings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) Total costs $ Operating income 100 % Total Print Done Print Done Print Done
