Spillett Corporation is conducting a time-driven activity-based costing study in

Question

Spillett Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:

On the Capacity Analysis report in time-driven activity-based costing, the “potential adjustment in the number of employees” would be closest to:

On the Capacity Analysis report in time-driven activity-based costing, the “unused capacity in minutes” would be closest to:

Spillett Corporation Order Fulfillment Department Data Inputs Resource Data: Number of employees 22 Average salary per employee $ 43,860 Weeks of employment per year 50 Minutes available per week (40 hours × 60 minutes) 2,400 Practical capacity percentage 85 %

Explanation / Answer

Weeks of employment per year 50 Minutes available per week 2400 Total minutes of employment per year 50*2400 120000 Number of employees 22 Total minutes available 120000*22 2640000 Practical Capacity 2640000*85% 2244000 Computation of Unused Capacity Used Capacity: Order Processed Deliveried Prepared Return Handled Total Number 43480 20780 690 Minutes used 18 30 34 Total minutes used 782640 623400 23460 1429500 Available minutes 2244000 Unused capacity 814500 Unused capacity in minutes would be closest to 814500 minutes Computation of potential Adjustment in No. of Employees Order Processed Number 43480 Unused Capacity (in Minutes) 814500 Totoal Minute Available (814500/85%) 958235 To Miuted of Empoyement pe year( 50*2400) 120000 No. of Employees unused (958235/120000) 8 Employee Hence potential adjustement can be made for 8 Employees

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