Question

Stahl Company is conducting a time-driven activity-based costing study in its Shipping Department. To aid the study, the company provided the following data regarding its Shipping Department and the customers served by the department.

Required: 

1. Using the customer cost analysis as demonstrated in Exhibit 7A-2 in your textbook, compute the following: 

a. The cost per minute of the resource supplied in the Shipping Department. 

b. The time-driven activity rate for each of Stahl's three activities. 

c.The total labor costs consumed by Customer L. Customer M, and Customer N. 

2. Using the capacity analysis as demonstrated in Exhibit 7A-3 in your textbook, compute the following: 

a. The used capacity in minutes. 

b. The unused capacity in minutes. 

c. The unused capacity in number of employees. 

d. The impact on expenses of matching capacity with demand. Complete this question by entering your answers in the tabs below. Required 1 Required 2

Answer 1

Part 1

a.	Cost per minute of the resources supplied	$0.20
b.	Time-driven activity rate
	Line-item packaging	$1
	Packaging	$3
	Loading deliveries	$6
c.	Total shipping labor cost assigned to:
	Customer L	$737
	Customer M	$477
	Customer N	$383

Part 2

a.	Customer service minutes used to meet demand	3652000
b.	Unused capacity in minutes	485120
c.	Unused capacity in number of employees	5
d.	Impact on expenses of matching capacity with demand	$(105000)

Part 1 A

Customer service department:
Number of employees (a)	39
Average salary per employee (b)	21000
Total cost of resources supplied (a) x (b)	$819000
Practical capacity per employee (in minutes) (a) (52*40*85%*60)	106080
Number of employees (b)	39
Practical capacity of resources supplied (in minutes) (a) x (b)	4137120
Cost per minute of the resources supplied (819000/4137120)	0.20

Part 1 B

	Line-item packaging	Packaging	Loading deliveries
Minutes per unit of the activity (a)	5	15	30
Cost per minute of the resources supplied (b)	0.20	0.20	0.20
Time-driven activity rate (a) x (b)	$1	$3	$6

Part 1 C

	Customer L	Customer M	Customer N
Number of Line-items picked (a)	295	195	145
Time-driven activity rate (b)	1	1	1
Line-item packaging costs assigned (a) x (b)	295	195	145
Number of boxes packed	49	29	31
Time-driven activity rate (b)	3	3	3
packaging costs assigned (a) x (b)	147	87	93
Number of deliveries loaded	6	2	10
Time-driven activity rate (b)	6	6	6
Loading deliveries costs assigned (a) x (b)	36	12	60
Total customer service costs assigned (line-item packaging cost packaging cost + loading deliveries cost)	$737	$477	$383

Part 2 A

	Line-item packaging	Packaging	Loading deliveries
Customer demand for each activity (a)	485000	50400	15700
Customer service minutes required per unit of each activity (b)	5	15	30
Customer service minutes used to meet demand (a) x (b)	2425000	756000	471000	3652000

Part 2 B

Total customer service minutes available to meet demand (a)	4137120
Customer service minutes used to meet demand (b)	3652000
Unused capacity in minutes (a) - (b)	485120

Part 2 C

Unused capacity in minutes    (a)	485120
Practical capacity per employee (in minutes) (b)	106080
Unused capacity in number of employees (a) / (b)	5

Part 2 D

Potential adjustment in number of employees    (a)	5
Average salary per employee (b)	21000
Impact on expenses of matching capacity with demand (a) * (b)	$(105000)