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 5 $ 30,000 Weeks of employment per year 52 Hours worked per week 40 Practical capacity percentage 85% Requisition Processing Bid Evaluation Inspection Minutes per unit of the activity 15 45 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 6 3 2 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 2,400 Bid Evaluation Inspection 3,850 6,600 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 5 $ 30,000 Weeks of employment per year 52 Hours worked per week 40 Practical capacity percentage 85% Requisition Processing Bid Evaluation Inspection Minutes per unit of the activity 15 45 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 6 3 2 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 2,400 Bid Evaluation Inspection 3,850 6,600 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
5
$ 30,000
Weeks of employment per year
Hours worked per week
52
40
Practical capacity percentage
85%
Requisition
Minutes per unit of the activity
Processing
15
Bid Evaluation Inspection
45
30
Job X
Job Y
Job Z
Number of requisitions processed
Number of bid evaluations
6
3
2
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
2,400
Bid Evaluation Inspection
3,850
6,600
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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