Hollifield 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) ($199,800)
B) ($233,100)
C) ($259,222)
D) ($266,400)

Question

Hollifield 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) ($199,800)
B) ($233,100)
C) ($259,222)
D) ($266,400)

Kayla Henderson · Accepted Answer

Final Answer : B, Explanation :  To calculate the impact on expenses of matching capacity with demand, we need to subtract the actual cost from the total capacity cost. The total capacity cost is $1,144,000 ($480,000 + $306,000 + $358,800) and the actual cost is $910,200 ($623,400 + $286,800). Therefore, the impact on expenses of matching capacity with demand is $233,100 ($1,144,000 - $910,200). Hence, the correct option is B.

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