Evaluate the costs incurred compared to the benchmark cost

Reference no: EM13334636

A consulting firm has a within the company a travel group that arranges flights and hotel accommodation for its over 1000 consultants. The cost of operating the travel group (excluding the costs associated with the actual travel such as hotel cost and air fare) amounts to approximately $800,000. A recent ABM study determined the following:

1) Each consultant takes approximately 20 business trips per year.

2) On average, 30% of the trips are rescheduled die to conflicts and poor planning.

3) The travel group employs 14 individuals at $45,000 each to book travel. In addition there is a travel manager and an assistant manager.

4) Benchmarking with a client indicates that the client incurs $30 cost per completed trip to book travel.

Required

Evaluate the costs incurred compared to the benchmark cost. The company is planning a process improvement initiative aimed at reducing scheduling conflicts, what would be the savings if rescheduling could be reduced by 50%? Assume that the only variable cost in travel services is the wages paid to employees who book travel.

Reference no: EM13334636

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