Kim Distribution Services (KDS) distributes food purchased in bulk to small reta
ID: 2563040 • Letter: K
Question
Kim Distribution Services (KDS) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. KDS has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the KDS loading dock. Distribution has 31 employees who are responsible for the activities, and all 31 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 15 percent of the employees' time for training and other administrative tasks. The total costs of distribution for the coming year are estimated to be $915,000. When asked, the manager of Distribution estimated the following times for each of the three activities: Taking orders: 11 minutes. .Picking orders: 30 minutes. . Packaging orders: 52 minutesExplanation / Answer
Answer:
1
Cost per minute = $0.29
Working notes for the answer
Total cost in Distribution = $915,000
Total minutes available = 3,162,000
Cost per minute = $0.29 (= $915,000 ÷ 3,162,000)
calculation of the Total minutes available
31 employees × 50 weeks × 40 hours per week × 0.85 × 60 minutes per hour
=31*50*40*0.85*60
=3,162,000
_____________________________________________
2
What is the cost of an order that requires all three activities?
Answer: the cost of an order =$29.97
Working notes for the answer
Taking
Orders
+
Picking
Orders
+
Packaging
Orders
=
Total
Minutes per order
11
+
30
+
52
93
Multiplied by
Cost per minute
0.29
Total costs
26.97
____________________________________________________
C)
How many minutes of unused capacity did Distribution have for the year?
Answer:
Unused minutes =52,500 minutes
Working notes for the answer
Taking
Orders
Picking
Orders
Packaging
Orders
Total
Total Minutes
3162000
Minutes per order
11
30
52
Multiplied by
Number of order
33000
38000
30900
Minuted used
363000
1140000
1606800
3109800
Unused Minutes
52200
_______________________________________________
d)
$15,138 (= 52,200 minutes × $0.29 per minute)
Taking
Orders
+
Picking
Orders
+
Packaging
Orders
=
Total
Minutes per order
11
+
30
+
52
93
Multiplied by
Cost per minute
0.29
Total costs
26.97
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