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 22 $ 22,000 Weeks of employment per year Hours worked per week Practical capacity percentage 52 40 85% Requisition Processing Bid Evaluation Inspection Minutes per unit of the activity 15 45 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 10 7 6 2 3 Number of inspections 1 5. 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? Bid Processing Evaluation Inspection 21,450 Requisition Activity demands for all jobs 16,300 23,700 Required: 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-eapaeity-inminutes- 3 Using the revised activity demands, calculate Saratoga's unused capacity in minutes. 4. Using the revised activity demands, calculate Saratoga's unused capacity in number of employees. (Round your answer to 2 decimal places.) 5. Based on the revised activity demands, calculate the impact on expenses of matching capacity with demand. (Be sure to round down your potential adjustment in the number of employees to a whole number. Negative amount should be indicated by a minus sign.) 1. Revised activity demands affect total Purchasing Department labor costs assigned to Jobs X, Y and Z? Yes 2. Used capacity in minutes 1,920,750 3. Unused capacity in minutes 824,850 4. Unused capacity in number of employees 5. Impact on expenses of matching capacity with demand
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 22 $ 22,000 Weeks of employment per year Hours worked per week Practical capacity percentage 52 40 85% Requisition Processing Bid Evaluation Inspection Minutes per unit of the activity 15 45 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 10 7 6 2 3 Number of inspections 1 5. 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? Bid Processing Evaluation Inspection 21,450 Requisition Activity demands for all jobs 16,300 23,700 Required: 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-eapaeity-inminutes- 3 Using the revised activity demands, calculate Saratoga's unused capacity in minutes. 4. Using the revised activity demands, calculate Saratoga's unused capacity in number of employees. (Round your answer to 2 decimal places.) 5. Based on the revised activity demands, calculate the impact on expenses of matching capacity with demand. (Be sure to round down your potential adjustment in the number of employees to a whole number. Negative amount should be indicated by a minus sign.) 1. Revised activity demands affect total Purchasing Department labor costs assigned to Jobs X, Y and Z? Yes 2. Used capacity in minutes 1,920,750 3. Unused capacity in minutes 824,850 4. Unused capacity in number of employees 5. Impact on expenses of matching capacity with demand
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 2MAD: Alvarez Manufacturing Inc. is a job shop. The management of Alvarez Manufacturing Inc. uses the cost...
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