VF is a small accounting firm supporting wealthy individuals intheir preparation of annual income tax statements. Every December,VF sends out a short survey to their customers, asking for theinformation required for preparing the tax statements. Based on 24years of experience, VF categorizes their cases into the followinggroups:
• 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 thecustomer’s earning situation. In order to prepare the income taxstatement, 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 thefollowing processing times are expressed in minutes per income taxstatement. Â
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 threepersons:
• 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 22days a month. For the following questions, assume the product mixas described above. Assume that there are 50 income tax statementsarriving each month.
