Fermi Company decided to look more closely at the materials receiving activity i

Question

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: 129,000

Refer to the list below for the exact wording of an amount description within your budget.

Amount Descriptions

Required:

1) 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.)

2)

Calculate the cost per receiving order based on annual demand for receiving orders. (Note: Round to the nearest cent.)

= $_______________ per receiving order

Resources needed: A. 6 workers capable of completing 25,300 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 $26,100 for each worker B. Supplies (paper, greasemarkers, small tools, rags) expected to cost $0.85 per receiving order C. Workbenches, dollies, computers, etc.; depreciation $14,600 per year D. Space for the receiving dock, utilities; $9,200 per year

Explanation / Answer

2. Cost Per Receiving Order on basis of Annual Demand = Total Receiving Cost/ Demand

=2,01,905/1,29,000

=$ 1.56 per receiving order

Static Budget Amount Description Amount Factory , Space, Utilities 9,200 Salaries (26,100 * 6 workers) 1,56,600 Supplies(25,300 * 0.85 per receiving order) 21,505 Workbenches, Computer, Depreciation 14,600 Total Receiving Cost 2,01,905

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