Group1 Div B

1) How could Colposcope INC improve its operations?

 The total idle time is 249 hours . Which can be used to bring in new portfolios in their
segments as well as manpower reduction is an option , which company can think off
 The rework initiated for house hours is coming majorly from Scanning & assembly
section . So one way they can save the time and cost in by doing QC check in the
scanning phase itself . Coz if the error gets detected and fixed in the scanning phase
then in assembly phase rework hours will get reduce. Which in turn will save
manhours and cost .
 The company also has an idle space of 6500 sq ft . Which can be used to sart a new
venture in their portfolio . As currently their major competitor is selling bundle of
pre-press & printing options . So going into the printing business will help them
getting back market share & compete with others .

2) How could it change its pricing strategy?

 Currently company does not have a fixed pricing strategy for all the customers . And
rework is one of the main cost driver for the company . So going forward Colposcope
Inc should charge a fixed base price based on the project at the initial phase and
then have a increment pricing strategy for every rework that customer asks for

 Colorscope Inc is offering fixed prices to all the customers and is incurring losses
whenever there is rework because of client feedback or internal errors. Colorscope
should charge additional money for rework. The additional money charged could
vary with phase in which feedback is received.
 Group1 Div B

 Company could invest in new technologies to reduce the cost of production and
increase its output as idle labour and space is available.

3) What accounting and control system should his company install?

Job Quality
Description Preparation Scanning Assembly Output Control Idle Total
Wages $8,000 $32,000 $64,000 $10,000 $11,000   $125,000
Depreciation $500 $25,000 $10,000 $14,000 $500   $50,000
Rent 2000 2000 8000 4000 1000 13000 $30,000
Others 1311 5246 10492 1639 1311   $20,000
Total 11811 64246 92492 29639 13811 13000 $225,000
Overhead
Labor Hour 160 640 1280 200 160    
Overhead 74 100 72 148 86    
Rate
Floor Space 1000 1000 4000 2000 500 6,500 15,000
in sq. ft.

 The company should start following the activity based costing . As shown above we
have found the Overhead rate for each department of the company by using exhibit
11 & 9
 This process will help identifying the cost drivers in each department so that it will
provide them value additions in each step of the production .