Activity-based management

Activity-based management. BLZ Corporation designs and produces massively multiplayer online role-playing games (MMORPG). Designing a completely new game can take up to two years, while expanding an existing game usually takes 8 to 10 months. Some of BLZ’s activities, with approximate costs, are shown below:

• Beta testing new games, $2,400

• Developing content for expansions, $7,680

• Fixing software bugs, $16,470

• Manufacturing game software CDs, $50,625

• Marketing and advertising, $7,000

• Processing returned CDs, $3,800

• Responding to player questions, $1,900

• Shipping CDs to retail stores, $8,100

• Writing instructional manuals, $4,200

• Recording transactions in the accounting information system, $9,430

a. Use a four-point scale to categorize the value added by each process, where “1” stands for an activity with little or no value and “4” stands for an activity with very high value.

b. Prepare a pie chart that shows the percentage of cost in each category.

c. Consider at least two activities you classify as having the lowest value. For each activity, suggest at least two ways it could be improved. Explain your reasoning.

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