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.

f. What resource has the highest utilization rate? Input 1 for junior accountant, input 2 for senior accountant, input 3 for administrative support person, input 4 for preparation.

Answer 1

Workload to the support person = 50*25%*(20+50) + 50*20%*(40+80) + 50*30%*(20+60) + 50*25%*(40+60) = 4,525 minutes per month.

Workload to the sr. accountant = 50*25%*(30+20) + 50*20%*(90+60) + 50*30%*(0+5) + 50*25%*(0+30) = 2,575 minutes per month

Workload to the jr. accountant = 50*25%*120 + 50*20%*300 + 50*30%*150 + 50*25%*200 = 9,250 minutes per month

So,

Since the workload is the highest for the junior accountant, the utilization rate will also be the highest for him (since all of them work for the same hours per day leading to equal capacity per month). So, the answer should be = 1