Figure 7-1.The receiving department of Owen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows:
-Refer to Figure 7-1. Calculate the cost for inspection.
Definitions:
Lockbox System
A service offered by banks to companies for the receipt of payment from customers, directly into a bank's post office box, to minimize the time it takes to deposit checks and access funds.
Collection Time
The average period it takes for a business to collect payments owed by its customers.
Check Clearing
The process of transferring funds from the bank on which a check is drawn to the bank where it was deposited.
Transaction Motive
The need to hold cash for the purpose of conducting day-to-day business transactions.
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