Resource Supply and Usage, Special Order, Relevancy

Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $26,650 and is capable of processing as many as 6,050 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,050 orders per year. The cost of each PC system is $1,250 per year. In addition to the salaries, Elliott spends $25,168 for forms, postage, and other supplies (assuming 24,200 purchase orders are processed). During the year, 23,400 orders were processed.

Required:

1. Which of the resources associated with purchasing can be classified as flexible resources?

Forms and clerksForms, Postage and SuppliesPC system and clerksPostage, Supplies and PC systemForms, Postage and Supplies

Which of the resources associated with purchasing can be classified as committed resources?

Forms and clerksPostage and PC systemPC system and clerksPostage, Supplies and PC systemPC system and clerks

2. Compute the total activity availability, and break this into activity usage and unused activity.

Activity availability:	fill in the blank 3	purchase orders
Activity usage:	fill in the blank 4	purchase orders
Unused activity:	fill in the blank 5	purchase orders

3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. When required, round your answers to the nearest dollar. If required, round your intermediate calculations to five decimal places.

Activity cost:	$fill in the blank 6
Cost of activity used:	$fill in the blank 7
Cost of unused activity:	$fill in the blank 8

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Feedback

1. Flexible resources are acquired as used and needed. Committed resources are acquired in advance of usage. For each item, ask yourself how it would need to be acquired. Are more resources needed as they are used?

2. What is the total of the orders the clerks are capable of processing in a year? How many orders were processed?

3. It might be easier to compute the cost of the unused activity first.