Question

Exercise 7A-1 Time-Driven Activity-Based Costing [LO 7-6] Saratoga Company manufactures Jobs to customer specifications. The company Is conducting a time-driven activity- based costing study In its Purchasing Department to better understand how Purchasing Department labor costs are consumed by Individual Jobs. To ald the study, the company provided the following data regarding its Purchasing Department and three of Its many Jobs Number of employees Average salary per employee weeks of employment per year Hours worked per week Practical capacity percentage 23 $ 22,9ee 52 40 85% Requisition 15 Job X Bid Processing Evaluation Inspection 45 Minutes per unit of the activity 30 Job Y Job Z Number of requisitions processed Number of bid evaluations Number of inspections Requirec 1. Calculate the cost per minute of the resource supplied In the Purchasing Department. 2. Calculate the time-driven activity rate for each of Saratoga's three activities. 3. Calculate the total purchasing labor costs assigned to Job X, Job Y, and Job Z. Complete this question by entering your answers in the tabs below Required 1Required 2 Required 3 Calculate the total purchasing labor costs assigned to Job X, Job Y, and Job Z. (Round your intermediate calculations and f answers to 2 decimal places.) Job X Job Y Job Z Total purchasing labor costs assigned to jobs KRequired 2 Required3

Answer 1

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			Job X	Job Y	Job Z
	Total purchasing cost	=	$           100.80	$    56.70	$    97.65
	Workings:
	Total salary	=	$22000 * 23
		=	$       5,06,000
	Total practical minutes	=	23 * 52 * 40 * 60 * 85%
		=	24,39,840
	Cost per minute	=	$506000 / 2439840
		=	$               0.21
			Requisition processing	Bid evaluation	Inspection
(i)	Cost per minute	=	$               0.21	$       0.21	$       0.21
(ii)	Minutes per unit	=	15	45	30
(i * ii)	Activity rate	=	$               3.15	$       9.45	$       6.30
			Activity rate	Job X		Job Y		Job Z
				Number	Cost	Number	Cost	Number	Cost
			(a)	(i)	(a * i)	(ii)	(a * ii)	(iii)	(a * iii)
	Requisition processing	=	$               3.15	11	34.65	8	25.2	7	22.05
	Bid evaluation	=	$               9.45	3	28.35	2	18.9	4	37.8
	Inspection	=	$               6.30	6	37.8	2	12.6	6	37.8
	Total purchasing cost	=			$ 100.80		$    56.70		$    97.65