Response to the following problem:
Compute activity-based cost rate, time equations
CAN Company sells multiple products and uses a time-driven ABC system. The company's products must be wrapped individually before shipping. The packaging and shipping department employs 24 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.
Required :
(a) Using the principles discussed in this chapter and time-driven ABC, what is the rate per hour for each packaging and shipping employee at CAN?
(b) On average, it takes one packaging and shipping employee 15 minutes to prepare a package and label, independent of the number or types of items in the shipment, plus 6 minutes per item to bubble wrap and pack it in the carton. Using CAN's time-driven ABC system, what is the packaging and shipping cost assigned to Order 705, which consisted of 40 items?