Athens Company is conducting a time-driven activity-based costing study in its Engineering Department. To aid the study, the company provided the following data regarding its Engineering Department and the customers served by the department:
Number of employees ............................................... 10
Average salary per employee ................................. $90,000
Weeks of employment per year ..................................... 52
Hours worked per week .............................................. 40
Practical capacity percentage ..................................... 85%

Required:
1. Using the customer cost analysis shown in Exhibit 7A-2 as your guide, compute the following:
Exhibit 7 A- 2: Ridley Company: Customer Cost Analysis

a. The cost per hour of the resource supplied in the Engineering Department.
b. The time-driven activity rate per hour for each of Athens' three activities.
c. The total engineering costs consumed by Customer A, Customer B, and Customer C.
2. Using the capacity analysis shown in Exhibit 7A-3 as your guide, compute the following:
Exhibit 7 A- 3: Ridley Company: Capacity Analysis

a. The used capacity in hours.
b. The unused capacity in hours.
c. The unused capacity in number of employees. (Do not round your answer to a whole number.)
d. The impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)
3. Assume that Athens is considering expanding its business such that the estimated number of new products designed would increase to 250, the number of engineering change orders would jump to 320, and the number of products tested would rise to 240. Using these revised figures, calculate the following:
a. The used capacity in hours.
b. The unused capacity in hours.
c. The unused capacity in number of employees. (Do not round your answer to a whole number.)
d. The impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)

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New Engineering Product Change Product Design Orders Testing 20 40 All Customers 180 250 160 Customer Customer Customer Number of new products designed Number of engineering change orders Number of products tested 4 2 63 4 Ridley Company Customer Service Department Customer Cost Analysis 5 Step 1: Calculate the cost per minute of the resource supplied 7 Customer Service Department: 8 Number of employees (a) 9 Average salary per employee (b 10 Total cost of resources supplied (a)xb) 30 s 29,952 S 898,560 12 Practical capacity per employee (in minutes) la 13 Number of employees (b) 99,840 30 eh 14 Practical capacity of resources supplied in minutes) (a) x b) 2,995,200 15 16 Cost per minute of the resource supplied S 0.30 OrderQuery Credit 18 Step 2: Calculate the time-driven activity rate 19 Minutes per unit of the activity (a) 20 Cost per minute of the resource supplied (b 21 Time-driven activity rate (a) x (b) processing resolution reviews 30 0.3$0.30 0.30 9.00 $ 12 12.00 23 Step 3: Assign costs to cost objects 24 Number of orders processed (B) 25 Time-driven activity rate ( 26 Order processing costs assigned (a) x(b) CustomerA CustomerB Customer c 30 18 5 3.00 3.00 3.00 90.00 54.00 21.00 28 Number of customer queries (a) 29 Time-driven activity rate ( 30 Query resolution costs assigned (a) x(b) 10 S 9.00 .00 S 9.00 5 153.00 90.00 72.00 32 Number of credit checks (a) 33 Time-driven activity rate (b 34 Credit review costs assigned (a) xb) S 12.00 12.00 12.00 12.00 12.00 12.00 35 36 Total customer service costs assigned 37 255.00 156.00105.00 Ridley Company Customer Service Department Capacity Analysis Order processing resolutionrviws Total Query Credit 5 Step 1: Calculate the used capacity in minutes 6 Customer demand for each activity la) 7 Customer service minutes required per unit of each activity (b) 8 Customer service minutes used to meet demand (a) x(b) 200,000 10 4,5008,900 40 зо 2,000,000 15000 356000 2491,000 10 Step 2: Calculate the unused capacity in minutes 11 Total customer service minutes available to meet demand (a) 12 Total customer service minutes used to meet demand (b) 13 Unused capacity in minutes la) (b 14 15 Step 3: Calculate the unused capacity in number of employees 16 Unused capacity in minutes (a) 17 Practical capacity per employee (in minutes) (b) 18 Unused capacity in number of employees a(b) 19 2,995,200 2,491,000 504,200 504,200 99,840 5.05 20 Step 4: Calculate the financial impact of matching capacity with demand 21 Potential adjustment in number of employees [rounded (a) 22 Average salary per employee (b) 23 Impact on expenses of matching capacity with demand (a) x(b 24 25 Note: Cell B21 uses the formula =ıfB18>0, rounddown(-B18,0).roundupl-B13,01) (5.00 s 29,952 $(149,760