Question

Activity Availability, Capacity Used, Unused Capacity Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid $64,000 per year and is able to process 8,000 purchase orders. Last year, 35,600 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. per purchase order 2. Calculate, in terms of purchase orders, the: a. Total activity availability purchase orders b. Unused capacity purchase orders 3. Calculate the dollar cost of: a. Total activity availability b. Unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. Express total activity availability in terms of activity capacity used and unused capacity. Purchase orders Total activity availability Activity capacity used Unused capacity Dollars cost Total activity availability Activity capacity used Unused capacity 5. What if one of the purchasing agents agreed to work half time for $32,000? a. How many purchase orders could be processed by four and a half purchasing agents? purchase orders b. What would unused capacity be in purchase orders? purchase orders

Answer 1

Activity rate per purchase order Cost Order per per agent agent = ; $64000 8000 Activity rate per purchase t order = $64000 8000 - $ 8 seu endes Sen edes 9 Total activity availability No. of agents order per agent = - 5x 8000 40000 purchase Orders U unused capacity - = capacity Total availability - Used 40000 - 35600 uyod esden a Dollar cost of total activity available = Total orders available erder mare pen = 40000 X8 $ 320,000 capacity • 4400 X8 = $ 35,200 _ Cl colleu cost of unused

Purchase orders t unused capacitat Total activing awarilability - = Activity Capaciy used 35600 + 4400 40000 Dallase Lost $ 320,000 1. 5200 = $ 284,800 +$35200 +35560xo)_(uyoox 8) W Purchase orders - that could be poocessed 8000 X4 + 8000x i = 36000 eurde Unused capacing would be : 36000 - 35600 400 Orders