Complete the requirements for the enclosed case, and upload your answer file(s) here on or before the due date given. Your report on the above will be graded using the rubric. M3. A Modern Family Phone Plan.pdf

Actions

Required:

1. 1. Who are the stakeholders in this case? What are their relevant incentives (desires) or decisions to be made?
   2. Why should or shouldn't Zayna charge her father for his and her brother's phone use? What potential goals or purposes might she have for charging her father? Which reasons are the most pertinent?
   3. What criteria can Zayna use when determining how much to charge her father (e.g. what characteristics makes a price the "right" price? Which criteria are the most pertinent in this situation?
   4. How much should Zayna's father pay for August's phone bill?
   5. How should Zayna communicate this to her father and approach the phone bill for this and subsequent months?

A Modern Family Phone Plan

INTRODUCTION

As defined in the Federal Accounting Standards Advisory Board (FASAB) Glossary of Cost Accounting Terms, cost assignment is a process that identifies costs with activities, outputs, or other cost objects. In a broad sense, costs can be assigned to processes,activities, organizational divisions, products, and services. There are threemethods of cost assignment: (a) directly tracing costs wherever economically feasible, (b) cause-and-effect, and (c) allocating costson a reasonable and consistent basis.1 By assigning costs to different cost objects(instead of leavingcosts in an unassigned pool), organizations can potentially realize several benefits, including, but not limited to, better pricing of products and services, better manager accountability over limited resources,and better resourceplanning for the future. While cost assignment is a standardissue faced by for-profit companies, it also has extensive applications for not-for-profit organizations and for everyday transactions in which several individuals or groups benefitfrom shared resources. Whether it is a group of friendssplitting the bill at dinner,a pair of roommates planningon divvying up the rent for a new apartment, multiple business teams hiring a shared IT (information technology) specialist, or a company that must charge its servicesto several government contracts, reliable (or unreliable) cost assignment can significantly affect the behavior, profitability, and satisfaction of all partieswho benefit from and contribute toward shared resources.

CASE

Two years of preschool, 12 years of private elementary and secondary education,four years at a top tierstate university, four more years in medical school,and, finally, four years in medical residency: Zayna Khans road to becoming an internal medicine physician had been challenging but, ultimately, fruitful. Her graduation day had been a joyous and proud moment for her and her whole family in attendance, especially for her father, Rizwan, a Pakistani immigrant who had lived in the United States for nearly 40 years, working as an engineer for one of the Big Three auto companies; and less so for her younger brother, Manu, who, as the now-teenage baby of the family, alwaysbegrudged any attention doted on his sibling. Zaynanow Dr. Khanrode an emotional rollercoaster for several months that summer. Excitement to be graduating made way for relief to be done with school,which was then overshadowed by anxiety to be joining a small. clinic, where even as a newly minted physicianshe would be a part-owner of the medicalpractice. Her first weeks with her patientshad been exhausting but fulfilling; it felt like the work was never done, but she reveled in being able to help people in her community. With those experiences as her backdrop, Zayna sat back to enjoy a relaxing Saturday evening doing something noticeably and enjoyably mundane: reading an email from her father (see Exhibit 1) and poringover her most recentphone bill (see Exhibit2). A month ago, Zayna had added her fathers and brothers cellular phone lines to her own account. She was able to send them new smartphones and set them up to share her data allowance and plan discounts. To her surprise,Zaynas father had just emailed asking how much he should pay for his and Manus share of the phone bill. Zayna was slightlytaken aback: One day she would be a very financially securedoctor, but today she had a fledgling medical practice, a mortgage, and a mountain of student loans (see Exhibit 3). She was willingto provide phone service to her father and brotherfor free, but she knew her fathers offer to pay his and Manus share was sincere. What is the responsible thing for her to do? What was she going to say to her father? Should she charge her father for phone service,and if so, how much would be appropriate?

Exhibit 2. August Phone Bill

PHONE BILL DETAILS REF #	August 2017
1	Account	ZK Line	RK Line	MK Line	Total
Account Charges& Credits
Talk Plan (700 min) 2	$30.00				$30.00
Data Plan (6 GB) 3	$50.00				$50.00
Access Discount (22%) 4	($17.60)				($17.60)
Talk Time Overage Fee 5	$10.00				$10.00
Data Overage Fee 6	$0.00				$0.00
	$72.40				$72.40
Line Charges and Credits
Standard Talk Time (minutes) 7		300	200	200	700
Overage Talk Time (minutes) 8		50	0	75	125
Total Talk Time (minutes) 9		350	200	275	825
Data Usage (GB) 10		1.50	1.00	2.50	5.00
Monthly Line Charges 11		$20.00	$40.00	$40.00	$100.00
Usage & Purchase Charges 12		$5.00	$0.00	$15.00	$20.00
Surcharges & Other Charges 13		$4.16	$3.40	$3.52	$11.08
Government Taxes and Fees 14		$5.99	$6.05	$6.18	$18.22
		$35.15	$49.45	$64.70	$149.30
TOTAL MONTHLY BILL	$72.40	$35.15	$49.45	$64.70	$221.70
Note: All monetary values are in U.S. dollars.

1. Some items are incurred by the accountin total (regardless of the number of lines); other items are directly traced by the phone carrierto the individual phone lines.
2. Talk Plan accountfee providing 700 minutes of shared talk time. (Talk Options: 700 minutes = $30; 600 minutes $25; 500 minutes = $20; 400 minutes = $15; 300 minutes = $10)
3. Data Plan account fee providing6 GB of shared data (Data Options:6 GB = $50; 4 GB =$40; 2 GB = $30)
4. Account discount applied because of Zaynas professional association.
5. Penalty incurred when the accountstotal talk time exceeds the plan talk limit: $5.00 fixed penaltyplus $0.04 per overage minute.
6. Penalty incurred when the accountstotal data usage exceeds the plan data limit: $5.00 per GB.
7. Each lines talk time incurredprior to the account reachingits total plan limit.
8. Each lines talk time incurred after the account reaches its total plan limit.
9. Each lines total talk time incurredthroughout the billingperiod.
10. Each lines data usage incurred throughoutthe billing period.
11. Smartphone line access (the ability to access data on the cellular network):$20.00 for the first line; $40.00 for each subsequent line.
12. Items for media purchasedand in-app purchases.
13. Items imposed on users to recover carrier-incurred regulatory charges.
14. Items for user-incurred taxes and regulatory charges.

Exhibit 3 Select personal information for Zayna Khan, her father and her brother

	Zayna Khan	Rizwan Khan	Manu Khan
Relationship to Zayna	Self	Father	Brother
Age	29	54	15
Dependents	1 (self)	2 (self and son)	0
Monthly Gross Income	$10,000	$5,000	$0
Monthly LivingExpenses	$6,000	$3,500	$500
Bank AccountBalance	$8,000	$24,000	$300
Retirement AccountBalance	$0	$180,000	$0
Debts	$250,000 school loan $200,000 mortgage	$0	$0
Note: All monetary valuesare in U.S dollars.