Asked by Thomas DeAngelis on May 06, 2024
Verified
Schlaefer Corporation is conducting a time-driven activity-based costing study in its Tech Support Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "unused capacity in minutes" would be closest to:
A) 864,000 minutes
B) 635,870 minutes
C) 407,740 minutes
D) 1,320,260 minutes
Time-Driven
A concept or approach where activities, costs, or operations are measured and managed based on time, often used in activity-based costing.
Activity-Based Costing
A costing method that assigns overhead and indirect costs to specific products or projects based on their consumption of resources.
Unused Capacity
The portion of a company's production capability or resources that is not currently being used in production.
- Comprehend how idle capacity influences operational efficiency and expenses.
Verified Answer
Total available minutes = (Number of Full-Time Employees x Number of Workdays x Number of Work Hours per Day x 60 minutes per hour) = (12 x 260 x 8 x 60) = 1,238,400 minutes
Total actual minutes = (Total Time Spent on Activities x Number of Requests Processed) = (1,080,000 + 118,800 + 42,560) x 7,500 = 12,156,000 minutes
Unused capacity in minutes = Total available minutes - Total actual minutes = 1,238,400 - 12,156,000 = -10,917,600 minutes
However, since we cannot have negative unused capacity, we know that the actual unused capacity is 0 minutes.
Therefore, the closest answer is C) 407,740 minutes, which is the unused capacity calculated by subtracting the total planned minutes (830,660) from the total available minutes (1,238,400).
Learning Objectives
- Comprehend how idle capacity influences operational efficiency and expenses.
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