Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Zenon Computer (a fictitious company) computers at the retail level on the basis of customer service. It has invested significant resources in its customer service
Zenon Computer (a fictitious company) computers at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently the company has installed a traditional activity-based casting (ABC) system to provide better-quality cost information for pricing decision making, and customer profitability analysis. Most of the cost of running the customer service department are considered committed (i.e, short-term fixed) costs principally, personal and equipment costs). The budget cost for the upcoming period is $500,000. Activity analysis, recently conducted when the ABC system was implemented, revealed the following information: Based on the proceeding information, calculate the activity-cost driver (ABC) rates for each of the three activities performed by the customer service department. Assume that during the period actual cost-driver activity levels are exactly as planned. Under the situation, what is the total cost assigned to each of the activities? For each activity, what is the cost of unused capacity? Suppose that during the upcoming period, activities (i.e., cost-driver quantities) are exactly as budgeted, 500 customers, too that the practical capacity level for each of these activities is 10,000 customer orders, 200 complaints and 500 credit checks. Using cost-driver rates based on practical capacity levels for each activity and the associated cost of unusual capacity for each activity? What actions might management of Zenon Computer take in response to the analysis conducted in response to (2) above? What nonfinancial performance indicators do you recommend Zenon Computers monitors in terms of its customer service department? In general, how are these indicator chosen? (Thus is, how do you justify the items you are recommending?)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started