Question

QUESTION 2

1. VF is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, VF sends out a short survey to their customers, asking for the information required for preparing the tax statements. Based on 24 years of experience, VF categorizes their cases into the following groups:

   • Group 1 (new customers, easy): 25 percent of cases

   • Group 2 (new customers, complex): 20 percent of cases

   • Group 3 (repeat customers, easy): 30 percent of cases

   • Group 4 (repeat customers, complex): 25 percent of cases

   Here, “easy” versus “complex” refers to the complexity of the customer’s earning situation. In order to prepare the income tax statement, VF needs to complete the following set of activities. Processing times (and even which activities need to be carried out) depend on which group a tax statement falls into. All of the following processing times are expressed in minutes per income tax statement.  

   Group	Filing	Initial Meeting	Preparation	Senior Accountant Review	Writing
   1	20	30	120	20	50
   2	40	90	300	60	80
   3	20	No	150	5	60
   4	40	No	200	30	60

   The activities are carried out by the following three persons:

   • Administrative support person: filing and writing.

   • Senior accountant (who is also the owner): initial meeting, review by senior accountant.

   • Junior accountant: preparation.

   Assume that all three persons work eight hours per day and 22 days a month. For the following questions, assume the product mix as described above. Assume that there are 50 income tax statements arriving each month.

   a. Using “minutes of work” as your flow unit (in minutes), what is the capacity of the junior accountant per month?  Round the answer to the nearest whole number. For example, if your answer is 2543.65, round to 2544; if you answer is 2543.12, round to 2543.  

   Your answer is

Answer 1

Answer:

Capacity of junior accountant:

For group 1:

There are 25% of cases out of 50 income tax

Thus, for group 1, cases will be = (25/100) x 50 = 12.5

Time taken = 120 x 12.5 = 1500 minutes

For group 2:

There are 20% of cases out of 50 income tax

Thus, for group 2, cases will be = (20/100) x 50 = 10

Time taken = 300 x 10 = 3000 minutes

For group 3:

There are 30% of cases out of 50 income tax

Thus, for group 3, cases will be = (30/100) x 50 = 15

Time taken = 150 x 15 = 2250 minutes

For group 4:

There are 25% of cases out of 50 income tax

Thus, for group 4, cases will be = (25/100) x 50 = 12.5

Time taken = 200 x 12.5 = 2500 minutes

Thus, total time taken by junior accountant for presenting 50 cases = 1500+3000+2250+2500 = 9250 minutes for a month

Thus, the capacity of junior accountant for presenting 50 cases =9250 minutes for 50 customers