Fermi Company decided to look more closely at the materials receiving activity in its factory. The...
Fermi Company decided to look more closely at the materials receiving activity in its factory. The driver for receiving is the number of receiving orders. The following information for a year was collected:
Demand for receiving orders: 130,600
| Resources needed: | |
| A. | 6 workers capable of completing 24,700 receiving orders per year. (The completion of a receiving order requires unloading the materials onto the receiving dock, checking the receiving order against the purchase order and invoice, and carrying the materials to the materials storeroom.) Salary is $27,600 for each worker |
| B. | Supplies (paper, greasemarkers, small tools, rags) expected to cost $0.70 per receiving order |
| C. | Workbenches, dollies, computers, etc.; depreciation $14,800 per year |
| D. | Space for the receiving dock, utilities; $9,900 per year |
| Required: | |
| 1. Prepare a static budget for the receiving activity for the year. | |
| 2. Calculate the cost per receiving order based on annual demand for receiving orders. (Note: Round to the nearest cent.) |
Prepare a static budget for the receiving activity for the year. (Note: Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)
Score: 45/50
|
Fermi Company |
|
Static Budget |
|
For the Receiving Activity |
|
1 |
✔ |
✔ |
|
2 |
✔ |
✔ |
|
3 |
✔ |
|
|
4 |
✔ |
✔ |
|
5 |
✔ |
Calculate the cost per receiving order based on annual demand for receiving orders. (Note: Round to the nearest cent.)
----------------------per receiving order
Homework Answers
1) The static budget for receiving activity is shown as follows:-
| Fermi Company | ||
| Static Budget | ||
| For the Receiving Activity | ||
| 1 | Salaries (27,600*6 workers) | 165,600 |
| 2 | Supplies (24,700 receiving orders*$0.70) | 17,290 |
| 3 | Workbenches, dollies, computers, etc.; depreciation | 14,800 |
| 4 | Factory Space, Utilities | 9,900 |
| 5 | Total receiving cost (1+2+3+4) | 207,590 |
Therefore total receiving cost is $207,590.
2) Cost per receiving order = Total receiving cost/Demand for receiving orders
= $207,590/130,600 = $1.59 per receiving order
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