Exercise 7A-1 Time-Driven Activity-Based Costing [LO 7-6]

Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs:

Number of employees		20
Average salary per employee	$	25,000
Weeks of employment per year		52
Hours worked per week		40
Practical capacity percentage		85	%
	Requisition Processing			Bid Evaluation	Inspection
Minutes per unit of the activity	15			45	30
	Job X			Job Y	Job Z
Number of requisitions processed	8			5	4
Number of bid evaluations	4			3	5
Number of inspections	7			3	7

Required:

1. Calculate the cost per minute of the resource supplied in the Purchasing Department.

2. Calculate the time-driven activity rate for each of Saratogas three activities.

3. Calculate the total purchasing labor costs assigned to Job X, Job Y, and Job Z.