Question: Uchdorf Manufacturing just completed a study of its purchasing activity with the objective of improving its efficiency. The driver for the activity is number of purchase orders. The following data pertain to the activity for the most recent year:
Activity supply: six purchasing agents capable of processing 4,000 orders per year (24,000 orders)
Purchasing agent cost (salary): $42,000 per year
Actual usage: 21,000 orders per year
Value-added quantity: 13,000 orders per year
Calculate the volume variance. Round your final answer to the nearest dollar. $
Calculate the unused capacity variance. Round your final answer to the nearest dollar. $
What if the actual usage drops to 18,000 orders? What effect will this have on capacity management? Round your final answer to the nearest dollar. $