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Chapter 3 Cost Behavior Cornerstone Exercise 3.2 Activity Availability, Capacity Used, Unused Capacity OBJECTI Corazon Manufacturing Company has a purchasing department staffed by five purchasing
Chapter 3 Cost Behavior Cornerstone Exercise 3.2 Activity Availability, Capacity Used, Unused Capacity OBJECTI Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid $28,00 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents CORNE Required L. Calculate the activity rate per purchase order the: a. total activity availability b. unused capacity Calculate the dollar cost of: . total activity availability b. a. unused capacity Express total activity availability in terms of activity capacity used and unused capacity 5. 4. What if one of the purchasing agen hase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders? Corme OBJEC rstone Exercise 3.3 Account Analysis to Determine Cost Behavior Poston, owner of Poston Manufacturing. Inc., wants to determine the cost behavior of and overhead. Darnell pays his workers a salary; during busy times, everyone works to get orders out. Temps (temporary workers hired through an agency) may be hired to pack and completed orders for shipment. During slower times, Darnell catches up on bookkeep- nd administrative tasks while the salaried workers do preventive maintenance, clean the r ing, etc. Temps are not hired during slow times. Darnell found that workers' sal- emp agency payments, rentals, utilities, and plant and equipment depreciation are the dollar accounts. He believes that workers' salaries and plant and equipment depreciation temp agency payments are associated with the number of orders (since temp workers to pack and prepare completed orders for shipment), and clectricity is associated with ber of machine hours when the number of different parts stored by Poston exceeds the labo the lines are ed thy warehouse space. He can rent as much or
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