Question

1. Choi Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:

Activity Data:	Processing Orders	Preparing Deliveries	Handling Returns
Minutes per unit of the activity	14	30	32

Cost Object Data:	Customer P	Customer Q	Customer R
Number of orders processed	32	24	3
Number of deliveries prepared	14	9	9
Number of returns handled	0	0	1

The cost per minute of the resource supplied is $0.40.

On the Customer Cost Analysis report in time-driven activity-based costing, the Preparing Deliveries cost assigned to Customer Q would be closest to:

$108.00

$82.67

$128.00

$12.00

2. Lamorte Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:

Lamorte Corporation
Order Fulfillment Department
Data Inputs
Resource Data:
Number of employees		20
Average salary per employee	$	44,280
Weeks of employment per year		50
Minutes available per week (40 hours × 60 minutes)		2,400
Practical capacity percentage		90	%

Activity Data:	Processing Orders	Preparing Deliveries	Handling Returns
Minutes per unit of the activity	20	22	36

Cost Object Data:	Customer X	Customer Y	Customer Z
Number of orders processed	30	19	6

On the Customer Cost Analysis report in time-driven activity-based costing, the Processing Orders cost assigned to Customer Z would be closest to:

Multiple Choice

$49.20

$8.20

$69.24

$150.33

Answer 1

Answer to Question Number 1

Deliveries cost assigned to Customer Q =

• (Minutes per unit of the activity * Number of deliveries prepared * The cost per minute of the resource supplied) = (30*9*.4) =$108

Answer to Question number 2

• Cost per minute = Average salary per employee / weeks of employment per year / Minutes available per week /Practical capacity percentage = 44280/ 50/ 2400 / 90% = $ 0.41

the Processing Orders cost assigned to Customer Z would

Minutes per unit of the activity * Number of orders processed * Cost per minute = 20*6*0.41 = $49.2

Thanks