Chapter 7.A, Problem 3E

EXERCISE 7A-3 Time-Driven Activity-Based Costing LO 7-6, LO 7-7
Refer to the data in Exercises 7A-1 and 7A-2. 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?

Required:

1. How will these revised activity demands affect the total Purchasing Department labor costs assigned to Job X, Job Y, and Job Z? No calculations are necessary
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. (Do not round your answer to a whole number.)
5. Based on the revised activity demands, calculate the impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)