Please answer the following question with the below information:

Question: Using this capacity cost rate information, calculate the cost and profitability of the five orders in exhibit 6-10 (below). What explains the variation in profitability across the five orders?

1) The cost of processing cartons through the facility

To calculate the cost of processing cartons through the facility we need to first subtract the truck drivers expenses from the personnel expenses as it includes both warehouse and truck drivers expense and then we need to add warehouse expenses (excluding personnel) to it.

Cost of processing = ($2,570,000 - $250,000) + $2,000,000

= $4,320,000

Capacity that could be handled = 80,000 cartons

Cost per carton = $4,320,000/80,000 = $54 per carton

2) The cost of entering electronic and manual customer orders

Order entry expenses = $840,000

Each employee works for average of 1,500 hours per year.

Number of employees employed = 16

Capacity of resources = 1500 x 16 = 24,000 hours

Cost of manual order entry = $35/hr.

Time taken to enter a customer order manually = 0.15 hr + 0.075 hr = 0.225 hr

Total cost to entering manual customer order = 0.225hr x $35/hr = $7.875 per entry

Cost for verifying information on electronic customer order = 0.10 hr x $35/hr = $3.5 per entry

3) The cost of shipping cartons on commercial carriers

Cost of commercial freight = $450,000

Number of cartons shipped = 75,000

Shipping cost of each carton = $450,000/75,000 = $6 per carton

4) The cost per hour for desktop deliveries

Midwest leased 4 trucks and hired 4 drivers for desktop delivery services.

Hours available for desktop delivery = 1500 hrs x 4 = 6000hrs

Delivery resources cost is calculated by adding delivery truck expenses and truck driver compensation = $200,000 + $250,000 = $450,000

Cost per hour to deliver desktops = $450,000/6000 = $75/hr

bit \\( 6-10 \\) Office atdr Five