Thompson Manufacturing Company has three salaried clerks to process purchase orders. Each clerk is paid a...
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Thompson Manufacturing Company has three salaried clerks to process purchase orders. Each clerk is paid a salary of $28,000 and is capable of processing 5,000 purchase orders per year (working efficiently). In addition to the salaries, Thompson spends $7,500 per year for forms, postage, etc. Thompson assumes 15,000 purchase orders will be processed. During the year, 12,500 orders were processed. "Customer 001" acquired 112.000 units during the year, the average size of his orders was 2.800 units; whereas "Customer 165" acquired 7 units in a single transaction with the Company. Required: 1. Calculate the activity rate for the purchase order activity. Break the activity into fixed and variable components. 2. Compute the total activity availability, and break this into activity output and unused activity. Calculate the total cost of the resource supplied, and break this into the cost of activity output and the cost of unused activity. 3. 4. Assign the cost of purchase order activity to the two customers. How much is the cost per unit for each of them? 5. Measure the difference in "complexity" between the two customers. Thompson Manufacturing Company has three salaried clerks to process purchase orders. Each clerk is paid a salary of $28,000 and is capable of processing 5,000 purchase orders per year (working efficiently). In addition to the salaries, Thompson spends $7,500 per year for forms, postage, etc. Thompson assumes 15,000 purchase orders will be processed. During the year, 12,500 orders were processed. "Customer 001" acquired 112.000 units during the year, the average size of his orders was 2.800 units; whereas "Customer 165" acquired 7 units in a single transaction with the Company. Required: 1. Calculate the activity rate for the purchase order activity. Break the activity into fixed and variable components. 2. Compute the total activity availability, and break this into activity output and unused activity. Calculate the total cost of the resource supplied, and break this into the cost of activity output and the cost of unused activity. 3. 4. Assign the cost of purchase order activity to the two customers. How much is the cost per unit for each of them? 5. Measure the difference in "complexity" between the two customers.
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1 Calcul ate the activity rate for the purchase order activity Break the activity into fixed and var... View the full answer
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
Posted Date:
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