Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The procurement process for Jarom Wholesale Company includes a series of activities that transforms a materials requisition into a vendor payment. The process begins
The procurement process for Jarom Wholesale Company includes a series of activities that transforms a materials requisition into a vendor payment. The process begins with a request for materials. The requesting department prepares and sends a materials request form to the Purchasing Department. The Purchasing Department then places a request for a quote to vendors. Vendors prepare bids in response to the request for a quote. A vendor is selected based on the lowest bid. A purchase order to the low-bid vendor is prepared. The vendor delivers the materials to the company, whereupon a receiving ticket is prepared. Payment to the vendor is authorized if the materials request form, receiving ticket, and vendor invoice are in agreement. These three documents fail to agree 40% of the time, initiating effort to reconcile the differences. Once the three documents agree, a payment is made. The process can be diagrammed as follows: Preparing Materials Request (M/R) Requesting, Receiving, and Selecting Vendor Bids Preparing Purchase Order Preparing Receiving Ticket (R/T) Matching M/R, R/T, and Vendor Preparing and Delivering Vendor Invoice Payment Correcting Reconciliation Differences An activity analysis indicated the following activity costs with this process: Preparing materials request $32,000 Requesting, receiving, and selecting vendor bids 92,000 Preparing purchase order 20,000 Preparing receiving ticket 24,000 Matching M/R, R/T, and invoice 52,000 Correcting reconciliation differences 148,000 Preparing and delivering vendor payment 32,000 Total process activity cost $400,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started