TDABC

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			Activities	Unit Time (Minutes)	Driver	Books	Journals
Salaries	$130,000		Selecting or notifying	6	No. of selections	12,000	2,000
Computer maintenance	10,000		Processing requests	5	No. of requests	6,000	700
Library management system	30,000		Ordering	15	No. of orders	4,000	500
Supplies	10,000		Processing invoices	12	No. of invoices	3,000	250
Total	$180,000		Receiving books or journals	11	No. of units received	5,000	500

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.

Required:

1. Calculate the capacity cost rate for the Acquisition Department of the Shawnee University Library. Round your answer to the nearest cent. $fill in the blank 1 per hour

2. Using the capacity rate, determine the activity rates for each activity. Round your answers to the nearest cent.

	Activity Rates
Selecting	$fill in the blank 2	per selection
Processing requests	$fill in the blank 3	per request
Ordering	$fill in the blank 4	per order
Processing invoices	$fill in the blank 5	per invoice
Receiving	$fill in the blank 6	per unit

3. Using the activity rates, calculate the cost per unit for acquiring books and journals. Round your answers to the nearest cent.

	Books	Journals
Unit cost	$fill in the blank 7	$fill in the blank 8

What is the cost of unused capacity? $fill in the blank 9

4. Select a time equation for acquiring books and one for acquiring journals.

T = 5 (number of selections) + 15 (number of requests) + 11 (number of orders) + 6 (number of invoices) + 12 (number of units received)

T = 6 (number of selections) + 5 (number of requests) + 15 (number of orders) + 12 (number of invoices) + 11 (number of units received)

T = 11 (number of selections) + 6 (number of requests) + 12 (number of orders) + 15 (number of invoices) + 5 (number of units received)

T = 12 (number of selections) + 11 (number of requests) + 15 (number of orders) + 12 (number of invoices) + 5 (number of units received)

T = 15 (number of selections) + 12 (number of requests) + 5 (number of orders) + 12 (number of invoices) + 6 (number of units received)

Select:

a.b.c.d.e.b.

Using the time equations, calculate the unit costs for acquiring books and journals. Round your answers to the nearest cent.

	Books	Journals
Unit cost	$fill in the blank 11	$fill in the blank 12

5. Suppose that some professors respond with a request for a book or journal that is not on the list provided by the library. In such cases, it takes an additional two minutes to read and reply.

Select, how would you modify the time equations in Requirement 4 to deal with this additional complexity?

T = 6 (number of selections) + {5 + 2 (if request is not on the list)} x (number of requests) + 15 (number of orders) + 12 (number of invoices) + 11 (number of units received)

T = {5 + 2 (if request is not on the list)} x (number of requests) + 15 (number of orders) + 12 (number of invoices) + 11 (number of units received) + 6 (number of selections)

T = 15 (number of orders) + {5 + 2 (if request is not on the list)} x (number of requests) + 6 (number of selections) + 12 (number of invoices) + 11 (number of units received)

T = 12 (number of invoices) + 6 (number of selections) + {5 + 2 (if request is not on the list)} x (number of requests) + 15 (number of orders) + 11 (number of units received)

T = 11 (number of units received) + {5 + 2 (if request is not on the list)} x (number of requests) + 15 (number of orders) + 12 (number of invoices) + 6 (number of selections)

Select:

a.b.c.d.e.a.

What will be the unit cost for books if out of the 6,000 requests for books, 500 are for books not on the list provided? $fill in the blank 14

Identify the data analytic type (descriptive, diagnostic, predictive, or prescriptive) that will help the library answer these questions. Note: More than one analytic type might apply.

Developing a new time equation is

descriptivediagnosticpredictiveprescriptivedescriptive

Computing a new equation is

descriptivediagnosticpredictiveprescriptivepredictive