The manager of the Personnel Department at City Enterprises has been reading abo
ID: 2536664 • Letter: T
Question
The manager of the Personnel Department at City Enterprises has been reading about time-driven ABC and wants to apply it to her department. She has identified four basic activities her employees spend most of the their time on: Interviewing, Hiring, Assessment, and Separation Processing. The department employs 5 staff who perform these activities. The manager provides the following estimates for the amount of time it takes to complete each of these activities:
Employees in Personnel work 31-hour weeks with four weeks for vacation. Of the 31 hours, five are reserved for administrative tasks, training, and so on. The costs of the Personnel Department, including any allocated costs from other staff functions, are $786,240. During the year, Personnel conducted 1,220 interviews, made 385 hires, made 3,400 assessments, and had 290 separations.
The manager of the Personnel Department decides that her estimate of the activities might be too simple in two ways. First, the time to interview depends on the level of the position for which a candidate is sought. She estimates that for a candidate at the manager level, the additional interviewing time is 140 minutes. (Personnel Department employees only conduct the initial interview, but they accompany the candidate for interviews by the hiring executive or CEO.) For a candidate at the executive level, the additional time for interviewing is 410 minutes (in addition to the time required for a manager).
The second issue she identified is that the time for separation processing depends on whether the separation is voluntary. She estimates that an involuntary separation requires an additional 230 minutes of personnel time.
This is all the information given in the question.
Required a. What is the total time required for the interviewing activity? Total time required minutes b. What is the total time required for the separation processing activity? minutes Total time required c. What is the cost of interviewing a manager? An executive? (Round intermediate calculations and final answer to 2 decimal places.) Manager Executive d. What is the cost of a voluntary separation? An involuntary separation? (Round intermediate calculations and final answer to 2 decimal places.) Voluntary separation Involuntary separationExplanation / Answer
a). Time required for interviewing Activity: Av. time required for Initial interview + Av. time required additional for manager + Av time required additional for executive:
= 65 minutes + 140 min + 410 min. = 615 minutes
b). Total Time required for Sepration processing aCtivity = Av. time for sepration activity + Av. additional time for involuntary sepration activity.
= 100 min + 230 min = 330 minutes
c). Total Time required for activities performed:
Interviewing = 65 min * 1220 = 79300
Hiring = 70 min * 385 = 26950
Assessment = 95 min * 3400 = 323000
Seprationg = 100 min * 290 = 29000
Total Time = 458250 minutes
Total allocated cost = 786240
Cost per minute = 786240 / 458250 = 1.7157 or 1.72 per minute
Cost of interviewing a manager = (65 min + 140 min )*1.72 = $352.6
Cost of interviewing a executive = (65 min + 140 min + 410 min) * 1.72 = $1057.8
d). cost of voluntary sepration = 100 min * 1.72 = $172
Cost of involuntary sepration = 230 min * 1.72 = $395.6
(Answers above are based on cost per min on actual work basis, I'm not sure about the requirement of the question, hence cost per min as per standard is calculated below.)
Cost per min as per available time = 786240/ 374400 = $2.1 per min
Available time = 26 hrs * 5 personnel * 48 weeks * 60 min = 374400 min
c). Cost of interviewing manger = (65 +140) * 2.1 = $430.5
Cost of interviewing executive = (65+ 140 +410) * 2.1 = $1291.5
d). Cost of voluntary sepration = 100 min * 2.1 = $210
Cost of involuntary sepration = 230 min * 2.1 = $483
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