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? b. What is the total time required for the separation processing activity? c. What is the cost of interviewing a manager? An executive? (Round intermediate calculations and final answer to 2 decimal places.) d. What is the cost of a voluntary separation? An involuntary separation? (Round intermediate calculations and final answer to 2 decimal places.)

Answer 1

Total week in year				52
Less: Weak for vacation				4
Total week worked				48
Number of hours worked in week (35-5)				30
Number of employee				5
Number minutes in hour				60
Costs of the Personnel Department				972,000
Total minutes available (5 employee* 48 week*30 hours*60 minutes)				432,000
Cost per minute				2.25
Activities	Minute per activity	Number of activity	Total time activity
Interviewing	45	1,200	54,000	Minutes
Hiring	60	375	22,500	Minutes
Assessment	75	3,000	225,000	Minutes
Separation Processing	90	250	22,500	Minutes
Answer 1
What is the total time required for the interviewing activity?			54,000	Minutes
Answer 2
What is the total time required for the separation processing activity?			22,500	Minutes
Answer 3
What is the cost of interviewing a manager? ((45+120)*2.25)				$     371.25
What is the cost of interviewing An executive? ((45+120+360)*2.25)				$ 1,181.25
Answer 4
What is the cost of a voluntary separation? (90*2.25)				$     202.50
What is the cost of An involuntary separation? ((90+180)*2.25)				$     607.50