P5-19 (similar to) Question Help Lambda Department Store has developed the following information in order to develop a time-driven ABC model for its Accounts Receivable Department (Click the icon to view the information.) The time to process payments of customer invoices depends on whether the customer pays the bill manually or electronically, as shown above. The time to maintain each customer file is the same for all customers. The annual cost of the Accounts Receivable Department is $240,000 and the associated practical capacity of accounts receivable labor is 6,000 hours. The Accounts Receivable Department has six employees. Read the requirements. Requirement (a) What is the capacity cost rate for the Accounts Receivable Department? Data Table Determine the formula, then calculate the capacity cost rate for the Accounts Receivable Department. Capacity cost rate Estimated Worker Time Activity to Perform Activities Requirements Manual processing of invoice and cash receipt 1.1 hour Electronic processing of invoice and electronic funds transfer 0.4 hour Requirements (a) What is the capacity cost rate for the Accounts Receivable Department? Maintain customer file 0.9 hour (b) Lambda's Division 1 has 1,600 small- to medium-sized customers who annually generate a total of $7 million in sales, resulting in 7,000 invoices. These customers pay all their invoices manually. What is the annual activity-based cost associated with Division 1's customers? Print Done (c) Lambda's Division 2 has 150 large customers who annually generate a total of $7 million in sales, resulting in 300 invoices. These customers pay all of their invoices electronically. What is the annual activity-based cost associated with Division 2's customers? (d) Suppose half of Lambda's Division 1 customers change their method of payment to electronic next year. How many hours of accounts receivable labor will it require for 1,600 customers, 3,500 manual invoices, and 3,500 electronic invoices? How much will Division 1 be charged for the accounts receivable function? Will Lambda's costs decrease because of the shift to 50% electronic invoicing in Division 1? ? Check Answer Clear All Print Done