Chief accountant San Kean Indi at Lewinsky and Dikolli Architects has begun a pilot project exploring the use of time-driven-activity-based-costing (TDABC). Indi became aware of the attributes of TDABC at a recent professional development seminar. Indi has decided to use the administration support function for the pilot.

PART 1 Management accounting and cost management 

Relevant information that Indi has managed to collect so far is provided in Table 1.

Lewinsky and Dikolli Architects Table 1:

Total cost of resources supplied in the administrative function ....................................... $632 000
Four staff work 8 hours per day for 5 days, 46 weeks per year.
One staff member works 5 hours per day for 5 days 46 weeks per year.
Approximately 20% of staff time is spent on other activities other than providing support to the architects

Required

(a) Why do you think Indi believes TDABC might be applicable for Lewinsky and Dikolli Architects?

(b) Calculate the level of theoretical capacity and practical capacity within the administration support function.

(c) Calculate the cost per time unit of practical capacity.