Paisley Insurance Case Instructions

ACC 302

Dr. Ken Lorek

Due Date: Monday, February 27, 2012

Each group should prepare a written solution to the Paisley Insurance Case. (In addition, Alpha, Eta, and Theta Groups will make an oral presentation) I think that you can accomplish this task effectively in approximately 3-4 double-spaced typed pages making certain to include the following:

Provide an introductory paragraph where you sort of frame the case by providing an overview and discussing why ABC costing has potential advantages versus peanut-butter costing.

Prepare an ABC costing analysis of the billing department costs associated with residential accounts and commercial accounts. That is:

 Calculate the cost per driver unit for each activity.

 Calculate the cost per account for each customer class.

Interpret your results and recommend how the ABC costing data can be used by management. Should Paisley accept the service bureau’s proposal to outsource all accounts? Should Paisley offer a counterproposal? Why or why not? Be very specific.

What are the perceived benefits of ABC costing in this setting?

What are the perceived costs of ABC costing in this setting?

Your group is welcome to use any audio-visual aids (word documents on the padcam, power point, etc.) to help in your oral presentation. Each group member must have a speaking part that is approximately equal in length. You are not allowed to read your part but you are allowed to have one small notecard with major points that you wish to cover in your presentation.