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Question - Zigwell Manufacturing spent an average of $18 per order to issue 30,000 purchase orders last year. Of the cost per order, 60% was related to office and warehouse wage costs, 21% to office costs, 6% to overhead, and 13% to warehouse costs, Zigwell estimates that all wage costs will increase 4.6% this year and all other costs of purchasing will increase 2.1%.
Required -
a. What are the total estimated purchasing costs for this year?
b. If the same number of purchase orders is issued this year as last year, what is the estimated cost per purchase order, to the nearest cent?
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