There are few of similar questions like this here in Chegg which are not correct
ID: 2521154 • Letter: T
Question
There are few of similar questions like this here in Chegg which are not correct, don't just copy the answer from those questions and paste here because I will report you. If you are going to answer this question make sure, you do it accurately, otherwise please don't answer this question. thanks
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ERF Enterprises provides comprehensive AV services to institutions in the State of Colorado. Their customers fall into 3 categories - Hospitals, Schools and Hotels
ERF's Executive Vice President of Operations, Jennifer Murray, has noted that the Hotel business, while profitable, seems to take a lot of ERF's support resources
Ms. Murray has asked for your support in getting a better picture of the profitability of each of the 3 lines of business
She provides the following data on the support activities of ERF for a 12-month period
Cost Driver
Cost per Unit
Site visits
# of visits
$100 per visit
Maintenance - minor repairs and support
Hours (incl travel)
$50 per hour
Phone calls and e-mails
# of calls/emails
$10 per call/e-mail
The average support-resource consumption by category is provided below:
Category
Site Visits
Maintenance (Hrs)
Calls/e-mails
Hospital
12
8
45
School
8
5
26
Hotel
64
20
12
Excluding the cost of support, the average profitability of each category is given below:
Category
Profit before cost of service and support
Hospital
$22,000
School
$20,000
Hotel
$25,000
Q1. Provide Ms. Murray with a an activity-based analysis of the profitability of each category of customer
Q2. After reviewing the data and analyses, what advice may be given to service personnel to improve profitability of the category with the lowest profit (after support cost)?
Is there some unusual explanation for high activity levels which could be further investigated? What creative questions could be asked?
Cost Driver
Cost per Unit
Site visits
# of visits
$100 per visit
Maintenance - minor repairs and support
Hours (incl travel)
$50 per hour
Phone calls and e-mails
# of calls/emails
$10 per call/e-mail
Explanation / Answer
The first part is to find the profiatbility of all theactivities. Amount are in $
This will give Mr. Murray a clear picture of the profitabilityof its business from different activities.
2. The lowest profit making business will be of hotel. Thesuggestion that i would like to recommend to Mr. Murray is that thenumber of site visits should be reduced while other businessessHospital and School take only 12 and 8 visit respectively Hospitalalone takes up 64 and shoots the costs to $6400 so this has to bereduced by service personnel.
3. Service personnel can be asked to fill in the customerfeedback form each time the service is delivered, Why such numberof visit was required, can cross verify from the customers hotel,hospitals and school whether they actually appeared. these are fewquestion which can be asked.
Particulars Hospital School Hotel Profit $ 22,000 20,000 25,000 Number of site visits 12 8 64 Cost per site visit 100 100 100 Cost of site visites A 1,200 800 6,400 Maintenance Hours 8 5 20 Cost per hour 50 50 50 Cost of Maintenance B 400 250 1,000 Number of calls and emails 45 26 12 Cost of a call and email 10 10 10 Cost of calls and emails C 450 260 120 Total Cost (A+B+C) 2050 1310 7520 Profit 19,950 18,690 17,480Related Questions
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