Question

# The manager of the Personnel Department at City Enterprises has been reading about time-driven ABC and...

The manager of the Personnel Department at City Enterprises has been reading about time-driven ABC and wants to apply it to her department. She has identified four basic activities her employees spend most of the their time on: Interviewing, Hiring, Assessment, and Separation Processing. The department employs 14 staff who perform these activities. The manager provides the following estimates for the amount of time it takes to complete each of these activities:

• Interviewing: 54 minutes.

• Hiring: 69 minutes.

• Assessment: 93 minutes.

• Separation Processing: 99 minutes.

Employees in Personnel work 44-hour weeks with four weeks for vacation. Of the 44 hours, five are reserved for administrative tasks, training, and so on. The costs of the Personnel Department, including any allocated costs from other staff functions, are \$981,000. During the year, Personnel conducted 2,100 interviews, made 555 hires, made 4,800 assessments, and had 295 separations.

Required:

a. What is the cost per minute for activities in Personnel? (Round your answer to 2 decimal places.)

b. What is the cost of interviewing and hiring one employee? (Round your intermediate calculations and final answer to 2 decimal places.)

c. How many minutes of unused capacity did Personnel have for the year?

d. What was the cost of the unused capacity in Personnel? (Round your intermediate calculations to 2 decimal places and round your final answer to the nearest whole dollar.)

#### Homework Answers

Answer #1

Total minutes available in personeel department

=14 employees X (52 weeks-4 vacation weeks) X (44 hours- 5 hours reserved) X 60 Minutes per hour

=1,572,480 minutes

a.What is the cost per minute for activities in Personnel

cost of personnel department / total minutes

=\$981,000/1,572,480

=\$0.62 per minute

B. Cost of interviewing employee

54 minutes X cost per minute

54 minutes X \$0.62 per minute

=\$33.48

Cost of hiring =\$0.62*69 minutes

=42.78

C.

 Time required Total Interviewing 54 minutes X 2,100 interviews 113,400 minutes Hiring 69 minutes X 555 hires 38,295 Assessment 93 X 4,800 446,400 Separation Processing 99 X 295 29,205 627,300

unused capacity = 1,572,480 (Total capacity as calulated in 1 above ) - 627,300

=945,180 minutes

D.cost of unused capacity

= 945,180*\$0.62

=\$586,012

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