Janice Dewey is the head of the accounts receivable department for a home nursing service called Helping Hands. The process can become quite complex as many of the payments the company receives come from insurance companies that often make it very difficult to collect on a claim. Janice has recently been told that she has to get a better handle on what her people are doing so the company can begin to meet some of its benchmark goals. She decides to ask two of her workers to fill out an activity- based budget analysis questionnaire to give her an understanding of where their time is being used. She chooses Babs Boreen, who makes $50,000 a year due to her seniority, and Joan Kolemay, who makes $40,000 a year as a new hire. The results of the study are:

REQUIRED:

a. Babs processes 10,000 receivables while Joan processes only 7,000 receivables. What is the activity cost for processing invoices for each individual?

b. Which employee do you think should be made the model for the department? Why? Use a business case structure to underscore your argument.

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Babs Boreen Salary Joan Kolemay Salary Activity % of Time $50,000.00 Activity % of Time $40,000.00 Process receivables 50% $25,000.00 Process receivables 40% $16,000.00 Prepare reports 5% $2,500.00 Prepare reports 20% $8,000.00 Work with auditor 10% $5,000.00 Organize desk 5% $2,000.00 Attend quality team meetings 5% $2,500.00 Work with marketing 10% $4,000.00 Organize desk Answer telephone Attend other meetings 15% $7,500.00 Answer telephone 5% $2,000.00 10% $5,000.00 Answer letters 10% $4,000.00 5% $2,500.00 Attend meetings 10% $4,000.00 100% $50,000.00 100% $40,000.00