Problem 6-16 Activity-based Management. Talbot partners are a consulting firm with clients across the nation. Within the company is a travel group that arranges flights and hotel accommodations for it’s over 1,000 consultants. The cost of operating the travel group (exclude the cost s associated with actual travel such as hotel cost and airfare) amounts to approximately $800,000. ,Recently Talbot partners have conducted an ABM study that has determined the following: ,A. Each consultant takes approximately 20 business trips per year. ,B. On Average, 30 percent of trips are rescheduling due to conflicts and poor planning. ,C. The travel group employs 14 individuals at $45,000 each to book travel. In addition, there is a travel manager and an assistant travel manager. ,D. Benchmarking with Talbot partners’ client indicates that the client incurs $30 cost per complete trip to book travel. ,Required ,A. Evaluate the cost incurred by Talbot partners compared to the benchmark cost. ,B. Talbot partners are planning a process improvement initiative aimed at reducing schedule conflicts. What would be the savings if rescheduling could be reduced by 5 percent? Assume that the only variable cost in travel services is the wages paid to employees who book travel. ,
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