Activity Availability, Capacity Used, Unused Capacity Corazon Manufacturing Comp

Question

Activity Availability, Capacity Used, Unused Capacity

Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid $35,000 per year and is able to process 7,000 purchase orders. Last year, 31,150 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:

3. Calculate the dollar cost of:

Explanation / Answer

1 activity rate per purchase order 35,000/7000 5 2 Calculate, in terms of purchase orders, the: a. Total activity availability 7000 purchase orders * 5 purchase agents 35000 b. Unused capacity 35000-31,150 3850 3 Calculate the dollar cost of: a. Total activity availability 35000*5 175000 b. Unused capacity 3850*5 19250

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