1. Activity Capacity Management

   Uchdorf Manufacturing just completed a study of its purchasing activity with the objective of improving its efficiency. The driver for the activity is number of purchase orders. The following data pertain to the activity for the most recent year:

   Activity supply: eight purchasing agents capable of processing 3,400 orders per year (27,200 orders)

   Purchasing agent cost (salary): $42,000 per year Actual usage: 24,800 orders per year Value-added quantity: 14,600 orders per year

   Required:

   1. Calculate the volume variance. Round your intermediate calculation to two decimal places and the final answer to the nearest dollar. $

   2. Calculate the unused capacity variance. Round your intermediate calculation to two decimal places and the final answer to the nearest dollar. $

   3. What if the actual usage drops to 20,000 orders? What effect will this have on capacity management? Round your intermediate calculation to two decimal places and the final answer to the nearest dollar. $