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The Purchasing Department of an international airways company is responsible for companywide purchasing. Its total costs are assigned to each division (one division in every
The Purchasing Department of an international airways company is responsible for companywide purchasing. Its total costs are assigned to each division (one division in every country the company is operating in) based on the number of purchase orders the Purchasing Department processes for each division. The Purchasing Department's fixed costs are 425,000 per year and the department is expected to process 17,000 purchase orders at a variable cost of 65 per purchase order. Purchasing costs do not include the cost of the items purchased. The Purchasing Department actually processed 19,500 purchasing orders during the year and incurred total costs (excluding the cost of the items purchased) of 1,600,000. Required: 1. Design a performance evaluation report for the Purchasing Department. 2. Describe what each item in the report measures. 3. Evaluate the performance of the Purchasing Department. 4. What other performance measures would you want to collect and report for the Purchasing Department
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