Question

Boiser Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:

Boiser Corporation
Order Fulfillment Department
Data Inputs
Resource Data:
Number of employees		17
Practical capacity per employee (in minutes)		102,000

Activity Data:	Processing Orders	Preparing Deliveries	Handling Returns
Minutes per unit of the activity	10	28	50

	All Customers
Number of orders processed	47,420
Number of deliveries prepared	31,880
Number of returns handled	860

On the Capacity Analysis report in time-driven activity-based costing, the “unused capacity in minutes” would be closest to:

• 867,000 minutes

• 324,160 minutes

• 1,409,840 minutes

• 595,580 minutes

Answer 1

	Computation	Minutes
Total practical capacity available (A)	17 employees × 102,000 minutes per employee	1,734,000
Capacity utilised
Orders processes	47,420 orders × 10 minutes per order	474,200
Deliveries prepared	31,880 deliveries × 28 minutes per delivery	892,640
Returns handled	860 returns × 50 minutes per return handled	43,000
Total capacity utilised (B)		1,409,840
Unused capacity	(A) - (B)	324,160