**Saratoga Company Case Study: Time-Driven Activity-Based Costing**Saratoga Company manufactures jobs to customer specifications. They are conducting a time-driven activity-based costing study in their Purchasing Department to better understand how labor costs are consumed by individual jobs. Below is the provided data regarding the Purchasing Department and three specific jobs:### Company and Job Data- **Number of employees:** 22- **Average salary per employee:** $22,000- **Weeks of employment per year:** 52- **Hours worked per week:** 40- **Practical capacity percentage:** 80%#### Activity Times (Minutes per Unit)- **Requisition Processing:** 15- **Bid Evaluation:** 45- **Inspection:** 30#### Job Activity Data| Activity | Job X | Job Y | Job Z ||-----------|-------|-------|-------|| Requisitions Processed | 10 | 7 | 6 || Bid Evaluations | 2 | 1 | 3 || Inspections | 5 | 1 | 5 |### Future Activity DemandsSaratoga Company is considering future activities and their effects on job costs and staffing levels:| Activity | Activity Demand (Minutes) ||---------------------------------|---------------------------|| Requisition Processing | 16,300 || Bid Evaluation | 21,450 || Inspection | 23,700 |### Required Calculations1. **Revised Labor Costs:** How will the revised activity demands affect labor costs for Jobs X, Y, and Z?2. **Used Capacity in Minutes:** Calculate capacity used based on new demands.3. **Unused Capacity in Minutes:** Determine the unused capacity.4. **Unused Capacity in Employees:** Compute unused capacity expressed in the number of employees (rounded to two decimal places).5. **Capacity Adjustment Impact:** Assess the financial impact of adjustments required to match capacity with demand, rounding employee adjustments to whole numbers (negative numbers indicated by a minus sign).These exercises help the company evaluate its staffing and cost allocations, crucial for strategic planning in adapting to changing demand.

Name: **Saratoga Company Case Study: Time-Driven Activity-Based Costing**Sa
Uploaded: 2024-03-20T06:32:49.000Z
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Description: **Saratoga Company Case Study: Time-Driven Activity-Based Costing**Saratoga Company manufactures jobs to customer specifications. They are conducting a time-driven activity-based costing study in their Purchasing Department to better understand how

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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 aid 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 22 $ 22,000 52 40 85% Requisition Processing Bid Evaluation Inspection 30 Minutes per unit of the activity 15 45 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations Number of inspections 10 6. 5 5 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job costs and our staffing levels within the Purchasing Department? Requisition Processing 16, 300 Bid Evaluation Inspection 21,450 Activity demands for all jobs 23,700 Required: 1. Will the revised activity demands affect the total Purchasing Department labor costs assigned to Job X, Job Y, and Job Z? 2. Using the revised activity demands, calculate Saratoga's used capacity in minutes. 3. Using the revised activity demands, calculate Saratoga's unused capacity in minutes. 4. Using the revised activity demands, calculate Saratoga's unused capacity in number of employees. (Round your answer to 2 decimal places.) 5. Based on the revised activity demands, calculate the impact on expenses of matching capacity with demand. (Be sure to round down your potential adjustment in the number of employees to a whole number. Negative amount should be indicated by a minus sign.) 1. Revised activity demands affect total Purchasing Department labor costs assigned to Jobs X, Y and Z? Used capacity in minutes 3. 2. Unused capacity in minutes Unused capacity in number of employees 5. 4. Impact on expenses of matching capacity with demand