The manager of the Personnel Department at City Enterprises has been reading abo
ID: 2597841 • 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 13 staff who perform these activities. The manager provides the following estimates for the amount of time it takes to complete each of these activities:
Interviewing: 53 minutes.
Hiring: 68 minutes.
Assessment: 91 minutes.
Separation Processing: 98 minutes.
Employees in Personnel work 43-hour weeks with four weeks for vacation. Of the 43 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 $980,000. During the year, Personnel conducted 2,000 interviews, made 535 hires, made 4,600 assessments, and had 290 separations.
Required:
a. What is the cost per minute for activities in Personnel? (Round your answer to 2 decimal places.)
b. What is the cost of interviewing and hiring one employee? (Round your intermediate calculations and final answers to 2 decimal places.)
c. How many minutes of unused capacity did Personnel have for the year?
d. What was the cost of the unused capacity in Personnel? (Round your intermediate calculations to 2 decimal places.)
Explanation / Answer
Step 1 - Cost per minute for activities in personnel
(a) Total week in a year = 52
Total Week worked = 52 week - 4 vacation week = 48 week
(b) Total hour Worked = 43 hours - 5 reserved hour = 38 hours
(c) Total Minutes Available = 13 employees * 48 week * 38 hours * 60 Minutes per hour = 1422720 Minutes
Cost per Minute
Step 2 - Cost of interviewing and hiring one employee
Minutes for Interviewing anf hiring = 53 + 68 = 121 Minutes
Total cost of per minute = $0.69
Total Cost of interviewing and hiring = $83.49
Step 3 - Minutes of unused capacity personnel have
Total Minutes used by activities
Unused Minutes
Step 4 - Cost of Unused Capacity
833320 Unused Minutes * 0.69 Cost per Minute = $574990.8
Particulars Total cost (A) $980000 Total Minutes available (B) 1422720 Cost per Minute for activities in personnel (A/B) $0.69Related Questions
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