Beauty Beyond Words Salon uses an activity-based costing system to determine the cost of services. The salon has determined the costs of services by activity and activity usage as follows:
-WeeBee Company has three assembly labor classifications: S-1, S-2, and S-3. The three classifications are paid $16, $19, and $22 per hour, respectively. The assembly activity for a product uses an S-2 employee who performs that task in 24 minutes. To reduce the activity cost per unit, a product engineer proposes using a higher-rated employee who can perform the assembly in 21 minutes. A manager proposes using a lower-rated employee who can perform the assembly in 30 minutes. Which of the following provides the most cost-effective solution?
A)use the S-1 employee
B)use the S-2 employee
C)use the S-3 employee
D)use either the S-1 or S-3 employee

Question

Beauty Beyond Words Salon uses an activity-based costing system to determine the cost of services. The salon has determined the costs of services by activity and activity usage as follows:   ​
-WeeBee Company has three assembly labor classifications: S-1, S-2, and S-3. The three classifications are paid $16, $19, and $22 per hour, respectively. The assembly activity for a product uses an S-2 employee who performs that task in 24 minutes. To reduce the activity cost per unit, a product engineer proposes using a higher-rated employee who can perform the assembly in 21 minutes. A manager proposes using a lower-rated employee who can perform the assembly in 30 minutes. Which of the following provides the most cost-effective solution?
A)use the S-1 employee 
B)use the S-2 employee 
C)use the S-3 employee 
D)use either the S-1 or S-3 employee

Quizplus · Accepted Answer

The S-2 employee is the most cost-effective solution because they can perform the assembly in the shortest amount of time, which reduces the labor cost per unit.

Beauty Beyond Words Salon Uses an Activity-Based Costing System to Determine