Question

Resource Supply and Usage, Special Order, Relevancy Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $22,800 and is capable of processing as many as 6,750 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,750 orders per year. The cost of each PC system is $1,000 per year. In addition to the salaries, Elliott spends $28,080 for forms, postage, and other supplies (assuming 27,000 purchase orders are processed). During the year, 26,200 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Which of the resources associated with purchasing can be classified as committed resources? 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: purchase orders Activity usage: purchase orders Unused activity: purchase orders 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. When required, round your answers to the nearest dollar. If required, round your intermediate calculations to five decimal places. Activity cost:

Answer 1

Answer:
1)
Forms, Postage, and other Supplies are classified as flexible resources.
PC Systems and Clerks are classified as committed resources.
2)
Activity availability:	27,000	purchase orders
Activity usage:	26,200	purchase orders
Unused activity: ( 27,000 (-) 26,200 )	800	purchase orders
3)
Activity cost: [( $ 22,800 + $ 1,000 ) x 4 Clerks ) + $ 28,080	$ 123,280
Cost per Order         = $ 123,280 / 27,000	4.56593
Cost of activity used ( 26,200 x 4.56593 )	$ 119,627
Cost of unused activity: ( 800 x 4.56593 )	$ 3,653