Question

Weisgarber Corporation is conducting a time-driven activity-based costing study in its Customer Service Department. The company has provided the following data to aid in that study: Weisgarber Corporation Customer Service Department Data Inputs Resource Data: Number of employees Average salary per employee Weeks of employment per year Minutes available per week (50 hours x 60 minutes) Practical capacity percentage 27 $ 38,760 70 3,000 85% Processing Processing Resolving Credit Activity Data: Minutes per unit of the activity Orders Queries 30 Reviews 24 56 Cost Object Data: Number of orders processed Number of queries resolved Number of credit reviews processed CustomerG All Customers 39 49,180 23 23,480 2,190 Required: a. Prepare a time-driven activity-based costing Customer Cost Analysis report that determines the totan Customer Service Department cost assigned to Customer G. b. Prepare a time-driven activity-based costing Capacity Analysis repdrt for the Customer Service Department that determines the impact on expenses of matching capacity with demand.

Answer 1

Weisgarber Corporation Weeks of employment per year(a) Minutes available per week (50 hours x 60 minutes) (b) Practical capacity percentage (c) Practical capacity per employee (in minutes) (a) (b) (c) 70 3000 85% 178500 Requirement a Customer Service Department Customer Cost Analysis Step 1: Calculate the cost per minute of the resource supplied Customer Service Department: Number of employees (a) Average salary per employee (b) Total cost of resources supplied (a) (b) 27 38760 1046520 27 Practical capacity per employee (in minutes) (a) 178500 Number of employees (b) Practical capacity of resources supplied (in minutes) (a) (b) 4819500 Cost per minute of the resource supplied 0.22 Processing Processing Resolving Credit Orders Queries Reviews Step 2: Calculate the time-driven activity rate Minutes per unit of the activity (a) Cost per minute of the resource supplied (b) 0.22 0.22 0.22 Time-driven activity rate (a) (b) 5.21 6.51 12.16 24 30 56 39 Step 3: Assign costs to cost objects Number of orders processed (a) Time-driven activity rate (b) Processing Orders costs assigned (a) (b) 5.21 203.25 Number of queries resolved (a) Time-driven activity rate (b) Resolving Queries costs assigned (a) (b) 23 6.51 149.83 Number of credit reviews processed (a) Time-driven activity rate (b) Processing Credit Reviews costs assigned (a) (b) 12.16 12.16 Total Customer Service Department costs assigned 365.23

Requirement b Processing Processing Resolving Credit Orders Queries Reviews Total 23480 Step 1: Calculate the used capacity in minutes Customer demand for each activity (a) Minutes required per unit of each activity (b) Minutes used to meet demand (a) (b) 49180 24 1180320 30 2190 56 122640 704400 2007360 Step 2: Calculate the unused capacity in minutes Total minutes available to meet demand (a) Total minutes used to meet demand (b) Unused capacity in minutes (a) (b) 4819500 2007360 2812140 Step 3: Calculate the unused capacity in number of employees Unused capacity in minutes (a) Practical capacity per employee (in minutes) (b) Unused capacity in number of employees (a) (b) 2812140 178500 15.75 Step 4: Calculate the financial impact of matching capacity with demand Potential adjustment in number of employees (rounded) (a Average salary per employee (b) Impact on expenses of matching capacity with demand (a) (b) -16 38760 -620160