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 9 $ 28,000 52 40 85% Minutes per unit of the activity Requisition Processing 15 Bid Evaluation 45 Inspection 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 10 7 6 2 1 3 Number of inspections 5 1 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? Activity demands for all jobs Required: Requisition Processing 7,100 Bid Evaluation 8,650 Inspection 10,500 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.)
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 9 $ 28,000 52 40 85% Minutes per unit of the activity Requisition Processing 15 Bid Evaluation 45 Inspection 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 10 7 6 2 1 3 Number of inspections 5 1 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? Activity demands for all jobs Required: Requisition Processing 7,100 Bid Evaluation 8,650 Inspection 10,500 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.)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 1MAD: Antolini Enterprises produces mens sports coats that are sold by popular department stores. Each...
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Transcribed Image Text: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
9
$ 28,000
52
40
85%
Minutes per unit of the activity
Requisition
Processing
15
Bid Evaluation
45
Inspection
30
Job X
Job Y
Job Z
Number of requisitions processed
Number of bid evaluations
10
7
6
2
1
3
Number of inspections
5
1
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?
Activity demands for all jobs
Required:
Requisition
Processing
7,100
Bid Evaluation
8,650
Inspection
10,500
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.)
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