Krueger Corporation is conducting a time-driven activity-based costing study in
ID: 342036 • Letter: K
Question
Krueger Corporation is conducting a time-driven activity-based costing study in its Customer Support Department. The company has provided the following data to aid in that study: Krueger Corporation Customer Support Department Data Inputs Resource Data: Number of employees 12 Average salary per employee $ 48,600 Weeks of employment per year 50 Minutes available per week (40 hours × 60 minutes) 2,400 Practical capacity percentage 90 % Activity Data: Receiving Calls Resolving Issues Settling Disputes Minutes per unit of the activity 14 26 40 Cost Object Data: Customer S Customer T Customer U Number of calls received 27 20 5 Number of issues resolved 15 12 8 Number of disputes settled 1 1 0 On the Customer Cost Analysis report in time-driven activity-based costing, the total cost assigned to Customer U would be closest to: Multiple Choice $93.60 $125.10 $0.00 $31.50
Explanation / Answer
Practical capacity per employee = 2400 min x 50 weeks x 90% = 108000 mins
Avg salary each month of one employee= 48600.
Therefore, cost per minute = 48600 / 108000 = 0.45
Analysis of Customer U:
Time spent in calls recd = No of calls recd x minutes per activity = 5 x 14 = 70 minutes
Time spent in issues resolved = No of issues x minutes per issue = 8 x 26 = 208 minutes
Therefore, total cost assigned will be = (70+208) x 0.45 = 125.10
Kindly rate f you find the solution explanatory and satisfactory
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