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rope (10 points) Monte Engineers Inc. provides engineering and architectural consulting services through three branch offices in Tampa, Lakeland, and Orlando. Monte allocates resources and bonuses to the branches based on operating income. The following presents the results of 2018 performance: Tampa | Lakeland Orlando Total Sales $1,500,000 $1,419,000 $1,067,000 $3,986,000 Less: Direct materials (281,000) (421,000) (185,000) (887,000) Direct labor (380,000) (320,000) (316,000) (1,016,000) Indirect costs (706,530) (594,960) (587,510) (1,889,000) Operating income $132.470 $83,040 $(21,510) $194,000 Monte accumulates indirect costs (rent, utilities, depreciation, insurance, etc.) in a single pool and allocates the costs to the branches based on direct labor dollars. The 2018 indirect cost rate was $1.86 per direct labor dollar. To more accurately reflect branch profitability, Monte has decided to apply indirect costs based on direct tracing and driver tracing. Monte analyzed and concluded that the following indirect costs can be traced directly to branches. Tampa $180,000 Direct overhead Lakeland $270,000 Orlando $177,000 Total $627,000 For the remainder of the indirect costs, activity pools and drivers were determined in order to use driver tracing: Assigned based on activity usage Totals Activity pools Activity driver Tampa Lakeland Orlando General administration Direct labor dollars $150,000 $ 128,000 $127,000 $405,000 Project costing # of payroll entries 21,600 13,700 12,600 47,900 Accounts payable # of payments paid 62,500 52,100 24,500 139,100 Accounts receivable # of clients 27,500 18,500 4,000 50,000 Payroll processing # of employees 10,300 11,700 8,600 30,600 Personnel recruiting # of new hires 16,000 8,000 14,000 38,000 Insurance processing # of claims filed 4,800 5,400 3,800 14,000 Proposals # of proposals 54,400 68,100 16,400 138,900 Sales meetings/support Sales dollars 97,100 74,500 30,300 201,900 Shipping # of projects 9,600 11,800 2,800 24,200 Ordering # of purchase orders 20,000 16,300 11,700 48,000 Duplicating /blueprinting # of blueprints 56,200 45,900 22,300 124,400 Total $530,000 $454,000 $278,000 $1,262,000 The operating incomes of each division using activity-based costing are: Tampa Lakeland Sales $1,500,000 $1,419,000 Less: Direct Materials (281,000) (421,000) Direct Labor (380,000) (320,000) Direct tracing (180,000) (270,000) Driver tracing (530,000) (454,000) Operating income $129,000 ($46,000) Orlando $1,067,000 (185,000) (316,000) (177,000) (278,000) $111.000 Total $3,986,000 (887,000) (1,016,000) (627,000) (1,262,000) $194.000 oncisely but specifically discuss: What does the analysis reveal? Do not just state the obvious that a given division has more or less co What strategic and operational decisions are affected by poor understanding of the true indirect costs: Discuss which drivers are unit, batch, product sustaining or facility sustaining. Do you concur that number of clients is s good activity driver for the cost pool of accounts receivable processing? If not, discuss another. Select two activities and suggest two possible non-value added costs that could be part of the pool. For the possible non-value added costs, discuss specific/concrete tasks that could be combined, simplified, or eliminated in order to properly reduce costs without compromising quality. Use fishbone diagram analysis ar 4Ms as a guide (materials, manpower, machines, and methods)