Exercise 4-30

Name:

Solution

Insert amounts in the gray-shaded cells of columns C, E, and G.

If an answer is incorrect the word “Wrong” will appear.

a.

Cost of finding best suppliers

$   3,75,000

Number of phone calls made

      3,75,000

Cost per phone call

Cost to issue purchase orders

$   1,87,500

Number of purchase orders issued

         46,875

Cost per purchase order

Cost to review receiving reports

$   1,68,750

Number of receiving reports

         28,125

Cost per receiving report

Cost Assignment of Special Order:

Units

x

Rate

Phone calls made

       225

$   1.00

Wrong

Purchase orders issued

         50

$   4.00

Wrong

Receiving reports reviewed

         25

$   6.00

Wrong

Total cost assigned

b.

Purchasing Department cost assigned

    to special order

$           575

Number of units

              100

Purchasing Department cost per unit

    (rounded to nearest cent)

c.

Total costs

$   7,31,250

Total number of calls

      3,75,000

Cost per call (rate)

Number of calls for special order

              225

Cost assigned to special order

$             –  

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