Weimar Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study: On the Capacity Analysis report in time-driven activity-based costing, the "impact on expenses of matching capacity with demand" would be closest to:
A) ($183,600)
B) ($220,320)
C) ($257,040)
D) ($233,395)

Question

Weimar Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:  On the Capacity Analysis report in time-driven activity-based costing, the "impact on expenses of matching capacity with demand" would be closest to:
A) ($183,600) 
B) ($220,320) 
C) ($257,040) 
D) ($233,395)

Quizplus · Accepted Answer

The "impact on expenses of matching capacity with demand" is calculated by multiplying the unused capacity (in minutes) by the cost per minute. From the Capacity Analysis report, we can see that the unused capacity is 9,192 minutes (52,632 – 43,440). The cost per minute is $24 ($1,444,575 ÷ 60,190 minutes). Therefore, the impact on expenses of matching capacity with demand is 9,192 minutes x $24/minute = $220,320.

Weimar Corporation Is Conducting a Time-Driven Activity-Based Costing Study in Its