Question Completion:
Owl Company sells multiple products - very fragile hand carved stone owls. They use a time-driven ABC system. The company's products must be wrapped individually before shipping. The packaging and shipping department employs 12 people. Each person works 20 days per month on average. Employees in this department work an eight hour shift that includes a total of 75 minutes for breaks and a meal. The full compensation, including fringe benefits, for each packaging and shipping employee is $ 4,050 per month.
Answer:
Owl Company
The packaging and shipping cost assigned to Order 705, which has 40 items is:
= $127.50
Explanation:
a) Data and Calculations:
Number of people employed by the packaging and shipping department = 12
Working days per employee = 20 days per month on average
Shift per day = 8 hours
Minutes for breaks and a meal = 75 minutes per day
Total minutes spent working per month = (20 * 8 * 60) - (75 * 20) = 8,100
Salary per employee = $ 4,050 per month
Salary per minute = $0.50 ($4,050/8,100)
Minutes spent in preparing a package and label = 15 minutes
Minutes spent for bubble wrap and packaging = 6 minutes per item
Total Packaging and shipping cost = Total Minutes of labor used in Packaging (40 * 6 + 15) * Labor cost per minute
= 255 minutes * $0.50 per minute
= $127.50
