Question

The manager of the Personnel Department at City Enterprises has been reading about time-driven ABC and wants to apply it to her department. She has identified four basic activities her employees spend most of the their time on: Interviewing, Hiring, Assessment, and Separation Processing. The department employs 5 staff who perform these activities. The manager provides the following estimates for the amount of time it takes to complete each of these activities:

• Interviewing: 45 minutes.
• Hiring: 60 minutes.
• Assessment: 75 minutes.
• Separation Processing: 90 minutes.

Employees in Personnel work 35-hour weeks with four weeks for vacation. Of the 35 hours, five are reserved for administrative tasks, training, and so on. The costs of the Personnel Department, including any allocated costs from other staff functions, are $972,000. During the year, Personnel conducted 1,200 interviews, made 375 hires, made 3,000 assessments, and had 250 separations.

The manager of the Personnel Department decides that her estimate of the activities might be too simple in two ways. First, the time to interview depends on the level of the position for which a candidate is sought. She estimates that for a candidate at the manager level, the additional interviewing time is 120 minutes. (Personnel Department employees only conduct the initial interview, but they accompany the candidate for interviews by the hiring executive or CEO.) For a candidate at the executive level, the additional time for interviewing is 360 minutes (in addition to the time required for a manager).

The second issue she identified is that the time for separation processing depends on whether the separation is voluntary. She estimates that an involuntary separation requires an additional 180 minutes of personnel time.

Required:

a. What is the total time required for the interviewing activity?

manager- ? minutes

executive- ? minutes

b. What is the total time required for the separation processing activity?

voluntary separation- ? minutes

involuntary separation- ? minutes

c. What is the cost of interviewing a manager? An executive?

Manager- ?

executive- ?

d. What is the cost of a voluntary separation? An involuntary separation?

voluntary separation- ?

involuntary seperation- ?

Answer 1

Ans a

Total time required for interviewieng activity

Manager : 90 mins + Additional 120 mins = 210 min (3.5hours)

Executive : 210 min +360 min = 570 mins (9.5hours)

Ans B

Voluntary Seperation : 90 min (1.5 hours)

Involuntary Seperation : 90 mins + Additional 180 min = 270 min (4.5hours)

Ans C & D

No of Hours working in a week	35
Less : For Admin , training work etc	5
Balance working hours for Activities defined	30
Total weeks in a year	52
Less : No of weeks off	4
Working Weeks	48
No of hours worked by an empployee in a year	1,440
Total Hours worked by 5 employees in a year	7,200
Total Cost for the year	$      972,000
Cost per hour	$              135
Cost of:
Interviewing a Manager Cost (135*3.5)	$        472.50
Interviewing a Executive (135*9.5)	$     1,282.50
Voluntary Seperation (135*1.5)	$        202.50
Involuntary Seperation (135*3.5)	$        472.50