Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study...
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Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs: Number of employees Average salary per employee Weeks of employment per year Hours worked per week Practical capacity percentage 13 $ 26,500 52 40 85% Requisition Processing 15 Bid Evaluation 45 Inspection 30 Minutes per unit of the activity Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 7 4 3 Number of inspections 5 8 4 6 8 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job costs and our staffing levels within the Purchasing Department? Activity demands for all jobs Required: Requisition Processing 8,400 Bid Evaluation 11,100 Inspection 11,800 1. Will the revised activity demands affect the total Purchasing Department labor costs assigned to Job X, Job Y, and Job Z? 2. Using the revised activity demands, calculate Saratoga's used capacity in minutes. 3. Using the revised activity demands, calculate Saratoga's unused capacity in minutes. Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs: Number of employees Average salary per employee Weeks of employment per year Hours worked per week Practical capacity percentage 13 $ 26,500 52 40 85% Requisition Processing 15 Bid Evaluation 45 Inspection 30 Minutes per unit of the activity Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 7 4 3 Number of inspections 5 8 4 6 8 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job costs and our staffing levels within the Purchasing Department? Activity demands for all jobs Required: Requisition Processing 8,400 Bid Evaluation 11,100 Inspection 11,800 1. Will the revised activity demands affect the total Purchasing Department labor costs assigned to Job X, Job Y, and Job Z? 2. Using the revised activity demands, calculate Saratoga's used capacity in minutes. 3. Using the revised activity demands, calculate Saratoga's unused capacity in minutes.
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Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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