Activity Availability, Capacity Used, Unused Capacity Corazon Manufacturing Comp
ID: 2336610 • Letter: A
Question
Activity Availability, Capacity Used, Unused Capacity
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid $36,000 per year and is able to process 6,000 purchase orders. Last year, 26,700 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 $18,000?
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
Explanation / Answer
Agent Paid = $36000
Purchase Orders = 6000
No. of Agent = 5
Last years Purchase orders = 26700
1) Activity Rate Per Purchase order :-
= Agent Paid / Purchase Orders
= $36000 / 6000
= $6
2) Terms of Purchase orders :-
A. Total Activity availablity :-
= Purchase Orders * No. of Agents
= 6000 * 5
= 30000
B. Unused Capacity :-
= Total activity Availablity - Last Years Purchase Orders
= 30000 - 26700
= 3300
3) Dollar Cost of :-
A. Total Activity Availablity :-
= Agent Paid * No. of Agent
= $36000 * 5
= $180000
B. Unused Capacity :-
= 3300 * $7
= $23100
4) Express total activity in items of activity capacity used and unused capacity.
= $180000 - $23100
= $156900
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