Question

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 five 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: 45 minutes. Hiring: 60 minutes. Assessment: 75 minutes. Separation Processing: 90 minutes. Employees in Personnel work 35-hour weeks with four weeks for vacation. Of the 35 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 $972,000. During the year, Personnel conducted 1,200 interviews, made 375 hires, made 3,000 assessments, and had 250 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 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 intermediate calculations to 2 decimal places.)

Answer 1

There are 52 weeks in a Year.
During the year , Personnel Conducted 1200 Interviews.
Activity	Time Required	Total
Interviews	45Mins * 1200	54000
Hiring	60Mins*375	22500
Assessment	75Mins*3000	225000
Separation Processing	90Mins*250	22500
		324000
Number of Minutes worked	324000
Number of minutes available in a year for personnel department =
	48weeks*30 hours*5 staff*60 minutes
	432000	Minutes
a) Cost per minute = 972000/432000 =		$          2.25	Per minute
b) Cost of interviewing employee = 45mins*2.25		$      101.25
cost of hiring employee = 60*2.25		$      135.00
c) Unused capacity in minutes = 432000-324000		108000	Minutes
d) Cost of unused capacity = 108000*2.25		$ 243,000.00