Riley Company

Customer Service Department

Data Inputs

Resource Data:
Number of employees 30
Average salary per employees $ 29,952

Weeks per year 52

Minutes available per week (40 hours × 60 minutes) 2400
Practical capacity percentage 80%

Activity data Order processing Query resolution Credit reviews

Minutes per unit of the activiity 10 30 40

Cost Object Data Customer A Customer B Customer C

Number of orders processed 30 18 7
Number of customer queries 17 10 8
Number of credit reviews 1 1 1
All Customers
200,000
4,500
8,900
 Riley Company
Customer Service Department
Customer Cost Analysis

Step 1: Calculate the cost per minute of the resource supplied

Number of employees 30
Average salary per employees $ 29,952
Total cost of resources supplied 898,560

Weeks per year 52

Minutes available per week (40 hours × 60 minutes) 2400
Practical capacity percentage 80%
Practical capacity for all employee (in minutes) 2,995,200

Cost per minut of the resource supplied

Step 2: Calculate the time-driven activity rate

Activity data Order processing Query resolution

Minutes per unit of the activiity 10 30
Cost per minute of the resource supplied 89,856 29,952
Time-driven activity rate

Step 3: Assign costs to cost objects

Cost Object Data Customer A Customer B

Number of orders processed 30 18
Time-driven activity rate 90 90
Order processing costs assigned 2,700 1,620

Number of customer queries 17 10

Time-driven activity rate
Query resolution costs assigned

Number of credit reviews 1 1

Time-driven activity rate
Credit review costs assigned

Total customer servide costs assigned

Credit reviews
40
22,464

Customer C
7
90
630

1
 Riley Company
Customer Service Department
Capacity Analysis

Step 1: Calculate the used capacity in minutes

Order processing
Customer demand for each activity 200,000
Customer service minutes required per unit of each activity 10
Customer service minutes used to meet demand 2000000

Step 2: Calculate the unused capacity in minutes

Total customer service minutes available to meet demand 2,995,200

Total customer service minutes used to meet demand 2,475,000
Unused capacity in minutes 520,200

Step 3: Calculate the unused capacity in number of employees

Unused capacity in minutes 520,200

Practical capacity per employee (in minutes) 99,840
Unused capacity in number of employees 5,210

Step 4: Calculate the financial impact of matching capacity with demand

Potential adjustment in number of employees (rounded) 5
Average salary per employee 29,952
Impact on expenses of matching capacity with demand 149,760
Query resolution Credit reviews Total
4,500 8,500
30 40
135000 340000 2475000