DBC

A consulting firm has recently installed a TDABC system for the Shawnee University Library. The consulting firm identified four major processes or departments for the library: Acquisition, Cataloging, Circulation, and Document Delivery. The Acquisition Department is responsible for acquiring new books and new journal subscriptions. Information for the Acquisition Department is given as follows:

Resource Costs ActivitiesUnit Time (Minutes)DriverBooksJournalsSalaries$130,000 Selecting or notifying6No. of selections12,0002,000Computer maintenance10,000Processing requests5No. of requests6,000700Library management system30,000Ordering15No. of orders4,000500Supplies10,000Processing invoices12No. of invoices3,000250 Total$180,000Receiving books or journals11No. of units received5,000500

Periodically, the library is notified of new books and journals by publishers. The Acquisition Department reviews the publishers' list to see if any items are already in the library's collection and also checks the demand for particular books or journals. After this selection process is complete, a list of potential acquisitions is sent to the professors of the university. Professors respond by sending a request for books or journals to the Acquisition Department. These requests are filtered, processed, and transferred to the person responsible for placing orders. When an invoice is received, it is compared with the order and payment is arranged. When the product is received, the product is verified and the requesting person is informed.

In the Acquisition Department, there are two full-time librarians and several student employees that provide 4,500 total labor hours (practical capacity). In addition, there are 500 machine hours used in the acquisition process (also at practical capacity). Thus, the total practical capacity of the Acquisition Department is 5,000 hours or 300,000 minutes per year. The library orders 5,000 new books per year and acquires 500 new journal subscriptions.

For each of the following requirements, identify the data analytic type (descriptive, diagnostic, predictive, or prescriptive) that will help provide the needed answers. Note: More than one data analytic type might appear in any requirement.

Required:

1. Based on interviews and observations, the consulting firm noted that 90 percent of the practical capacity of the Acquisition Department is used for book acquisition and 10 percent for journal acquisition. Using this information, calculate the cycle time for book acquisition and the cycle time for journal acquisition. Round your answers to the nearest cent.

BooksJournalsCycle timefill in the blank 1fill in the blank 2

The data analytic type is

descriptivediagnosticpredictiveprescriptivedescriptive

as it describes what is happening.

2. Calculate the OH or capacity cost rate for the library. $fill in the blank 4

Using this rate and the cycle times from Requirement 1, calculate the unit cost of book acquisition and the unit cost of journal acquisition. Round your answers to the nearest cent.

BooksJournalsUnit cost$fill in the blank 5$fill in the blank 6

Predict what the unit costs for books and journals would be if computer maintenance cost is budgeted to increase by 50 percent and salaries are budgeted to increase by $25,000.

BooksJournalsUnit cost$fill in the blank 7$fill in the blank 8

The unit cost calculation is

descriptivediagnosticpredictiveprescriptivepredictive

if the budgeted increases occur.

3. For each activity, use the TDABC information to convert the transaction drivers to duration drivers. Using the time values provided for each activity, estimate the cycle time for book acquisition and journal acquisition. Using these cycle time values, calculate the unit cost of book acquisition and the unit cost of journal acquisition. Round your answers to the nearest cent.

BooksJournalsCycle timefill in the blank 10fill in the blank 11Unit cost$fill in the blank 12$fill in the blank 13