Using Activity-Based Approach The following data are from the general records of

Question

Using Activity-Based Approach The following data are from the general records of the Loading Department of Bowman Freight Company for November.

Cleaning incoming trucks, 20 minutes.

Obtaining and reviewing shipping documents for loading truck and instructing loaders, 30 minutes.

Loading truck, 1 hour and 30 minutes.

Cleaning shipping dock and storage area after each loading, 10 minutes.

Employees perform both cleaning and loading tasks and are currently averaging $18 per hour in wages and benefits.

The supervisor spends 10 percent of her time overseeing the cleaning activities; 60 percent overseeing various loading activities; and the remainder of her time making general plans and managing the department. Her current salary is $4,500 per month.

Other overhead of the department amounts to $9,000 per month, 20 percent for cleaning and 80 percent for loading.

Prepare an activities budget for cleaning and loading in the Loading Department for November, assuming 20 working days and the loading of an average of 14 trucks per day. (Round answers two decimal places.)

Bowman Freight
Loading Department Activity-Based Budget
For the Month of November Activities: Cleaning: Trucks Answerhours Docks Answerhours Total cleaning time Answerhours Loading: Instructions Answerhours Loading trucks Answerhours Total loading time Answerhours Budget: Cleaning: Labor $Answer Overhead Answer Supervision Answer $Answer Loading: Labor Answer Overhead Answer Supervision Answer Answer Total $Answer

Explanation / Answer

Solution:

Activities budget for cleaning and loading in the Loading Department for November:

Bowman Freight Loading Department Activity-Based Budget For the Month of November Activities Cleaning: Trucks [(20 days * 14 trucks * 20 minutes)/ 60 minutes] 93.33 Docks [(20 * 14 * 10)/ 60] 46.67 Total cleaning time 140 hours Loading: Instructions [(20 * 14 * 30)/ 60] 140 Loading trucks [(20 * 14 * 90)/ 60] 420 Total loading time 560 hours Budget Cleaning: Labor (140 * 18 per hour)      2,520 Overhead (9,000 * 0.20)      1,800 Supervision (4,500 * 0.10) 450         4,770 Loading: Labor (560 * 18)    10,080 Overhead (9,000 * 0.80)      7,200 Supervision (4,500 * 0.60)      2,700       19,980 Total       24,750

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