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 Minutes per unit of the activity Number of requisitions processed Number of bid evaluations Number of inspections 11 $ 27,000 52 40 85% Requisition Processing 15 Job X 6 4 7 Bid Evaluation 45 Job Y 3 3 3 Job Z 2 5 7 Inspection 30 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 Bid Evaluation 8,300 10,950 Inspection 11,700 Activity demands for all jobs 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? 2. Used capacity in minutes 3. Unused capacity in minutes 4. Unused capacity in number of employees 5. Impact on expenses of matching capacity with demand

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Chapter1: Financial Statements And Business Decisions
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**Saratoga Company Time-Driven Activity-Based Costing Study**

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 labor costs are consumed by individual jobs. The following data pertains to its Purchasing Department and three of its many jobs:

- **Number of employees:** 11
- **Average salary per employee:** $27,000
- **Weeks of employment per year:** 52
- **Hours worked per week:** 40
- **Practical capacity percentage:** 85%

**Minutes per unit of the activity:**

- Requisition Processing: 15 minutes
- Bid Evaluation: 45 minutes
- Inspection: 30 minutes

**Data for Jobs X, Y, and Z:**

- **Job X:**
  - Number of requisitions processed: 6
  - Number of bid evaluations: 4
  - Number of inspections: 7

- **Job Y:**
  - Number of requisitions processed: 3
  - Number of bid evaluations: 3
  - Number of inspections: 3

- **Job Z:**
  - Number of requisitions processed: 2
  - Number of bid evaluations: 5
  - Number of inspections: 7
  
**Estimated Activity Demands for All Jobs:**

- Requisition Processing: 8,300 minutes
- Bid Evaluation: 10,950 minutes
- Inspection: 11,700 minutes

**Study Objective:**

Saratoga Company wants to determine the impact of activity demands on job costs and staffing levels using its time-driven activity-based costing system. The following key questions are assessed:

**Required Analysis:**

1. How will the revised activity demands affect the total labor costs for Jobs X, Y, and Z?
2. Using the revised demands, calculate Saratoga’s used capacity in minutes.
3. Using the revised demands, calculate Saratoga’s unused capacity in minutes.
4. Using the revised demands, calculate Saratoga’s unused capacity in number of employees (rounded to 2 decimal places).
5. Based on revised demands, calculate the impact on expenses of matching capacity with demand, rounding the adjustment in number of employees to a whole number (indicating negative amounts with a minus sign).

**Analysis Table:**

1. Revised activity demands affecting labor costs assigned to Jobs X, Y, Z? 
2. Used capacity
Transcribed Image Text:**Saratoga Company Time-Driven Activity-Based Costing Study** 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 labor costs are consumed by individual jobs. The following data pertains to its Purchasing Department and three of its many jobs: - **Number of employees:** 11 - **Average salary per employee:** $27,000 - **Weeks of employment per year:** 52 - **Hours worked per week:** 40 - **Practical capacity percentage:** 85% **Minutes per unit of the activity:** - Requisition Processing: 15 minutes - Bid Evaluation: 45 minutes - Inspection: 30 minutes **Data for Jobs X, Y, and Z:** - **Job X:** - Number of requisitions processed: 6 - Number of bid evaluations: 4 - Number of inspections: 7 - **Job Y:** - Number of requisitions processed: 3 - Number of bid evaluations: 3 - Number of inspections: 3 - **Job Z:** - Number of requisitions processed: 2 - Number of bid evaluations: 5 - Number of inspections: 7 **Estimated Activity Demands for All Jobs:** - Requisition Processing: 8,300 minutes - Bid Evaluation: 10,950 minutes - Inspection: 11,700 minutes **Study Objective:** Saratoga Company wants to determine the impact of activity demands on job costs and staffing levels using its time-driven activity-based costing system. The following key questions are assessed: **Required Analysis:** 1. How will the revised activity demands affect the total labor costs for Jobs X, Y, and Z? 2. Using the revised demands, calculate Saratoga’s used capacity in minutes. 3. Using the revised demands, calculate Saratoga’s unused capacity in minutes. 4. Using the revised demands, calculate Saratoga’s unused capacity in number of employees (rounded to 2 decimal places). 5. Based on revised demands, calculate the impact on expenses of matching capacity with demand, rounding the adjustment in number of employees to a whole number (indicating negative amounts with a minus sign). **Analysis Table:** 1. Revised activity demands affecting labor costs assigned to Jobs X, Y, Z? 2. Used capacity
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