Jarvis 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:? Jarvis Corporation?? Order Fulfillment Department?? Data Inputs??Resource Data:??Number of employees14?Average salary per employee$39,780?Weeks of employment per year50?Minutes available per week (40 hours × 60 minutes)2,400?Practical capacity percentage85%?Activity Data:Processing OrdersPreparing DeliveriesHandling Returns?Minutes per unit of the activity143032?Cost Object Data:Customer X?Number of orders processed35?Number of deliveries prepared16?Number of returns handled1Required:Prepare a time-driven activity-based costing Customer Cost
Analysis report that determines the total Order Fulfillment Department cost assigned to Customer X.
What will be an ideal response?
a.
| ? | Weeks of employment per year (a) | 50 |
| ? | Minutes available per week (40 hours × 60 minutes) (b) | 2,400 |
| ? | Practical capacity percentage (c) | 85% |
| ? | Practical capacity per employee (in minutes) (a) × (b) × (c) | 102,000 |
| ? | Jarvis Corporation | |
| ? | Order Fulfillment Department | |
| ? | Customer Cost Analysis | |
| ? | ? | ? |
| ? | Step 1: Calculate the cost per minute of the resource supplied | ? |
| ? | ? | ? |
| ? | Order Fulfillment Department: | ? |
| ? | Number of employees (a) | 14 |
| ? | Average salary per employee (b) | $39,780 |
| ? | Total cost of resources supplied (a) × (b) | $556,920 |
| ? | ? | ? |
| ? | Practical capacity per employee (in minutes) (a) | 102,000 |
| ? | Number of employees (b) | 14 |
| ? | Practical capacity of resources supplied (in minutes) (a) × (b) | 1,428,000 |
| ? | Cost per minute of the resource supplied | $0.39 |
| ? | Step 2: Calculate the time-driven activity rate | Processing Orders | Preparing Deliveries | Handling Returns |
| ? | Minutes per unit of the activity (a) | 14 | 30 | 32 |
| ? | Cost per minute of the resource supplied (b) | $0.39 | $0.39 | $0.39 |
| ? | Time-driven activity rate (a) × (b) | $5.46 | $11.70 | $12.48 |
| ? | Step 3: Assign costs to cost objects | Customer X |
| ? | Number of orders processed (a) | 35 |
| ? | Time-driven activity rate (b) | $5.46 |
| ? | Processing Orders costs assigned (a) × (b) | $191.10 |
| ? | ? | ? |
| ? | Number of deliveries prepared (a) | 16 |
| ? | Time-driven activity rate (b) | $11.70 |
| ? | Preparing Deliveries costs assigned (a) × (b) | $187.20 |
| ? | ? | ? |
| ? | Number of returns handled (a) | 1 |
| ? | Time-driven activity rate (b) | $12.48 |
| ? | Handling Returns costs assigned (a) × (b) | $12.48 |
| ? | ? | ? |
| ? | Total Order Fulfillment Department costs assigned | $390.78 |
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