Question
Tiger Mickelson is the HR director of a growing golf drivers company called Weapons of Grass Destruction (WGD) Corp. Tiger is reviewing the bill for
Tiger Mickelson is the HR director of a growing golf drivers company called "Weapons of Grass Destruction" (WGD) Corp.
Tiger is reviewing the bill for Information Technology (IT) work this year and wants you to look at these numbers below and give your management accounting advice:
IT Work Job Cost ($)
JAN 34,907
FEB 31,260
MARCH 37,950
APRIL 38,250
MAY 44,895
JUNE 44,055
Number of IT jobs completed
JAN 5,700
FEB 4,900
MARCH 6,100
APRIL 6,500
MAY 7,930
JUNE 7,514
SOLVE and ANALYZE:
1) Tiger asks you to show them the cost formula and also use the high-low method to find the fixed cost per month and variable rate./15 marks
2) WGD management expects they will have 75.600 jobs next year and they are considering outsourcing this IT work to a firm called "Fairway to Heaven" Inc.This firm's bid is $4.60 per IT Job. The WGD HR director asked whether they should outsource based on your calculations. Provide your management accounting expertise to help his business do the calculation and give advice on what they should do next to reduce their costs./10 marks
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