Question

Activity-Based Supplier Costing Clearsound uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125X and Component 307. Consider two activities: testing components and reordering components. After the two components are inserted, testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Activity cost information and other data needed for supplier costing are as follows: I. Activity Costs Caused by Suppliers (testing failures and reordering as a result) Activity Costs Testing components $1,200,000 Reordering components 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X 30Y 125X Y 30Y Unit purchase price $10 $26 $12 $28 Units purchased 120,000 15,000 15,000 75,400 780 Failed tests 1,000 10 0 Number of reorders 60 0 Required: Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent. Alpha Electronics La Paz Company 125X 3 0Y Only numbers are allowed in this field. $ X $ Unit cost:

Answer 1

Activity Price Quantity | Working Alpha Electronics 125X L 30Y LA Paz Company 125X 30Y Purchase Price of units $ 12,00,000 $ 19,60,400 $ $ $ $ 10.00 26.00 12.00 28.00 1,20,000 $10 x 120,000 75,400 $26 x 75,400 15,000 $12 x 15,000 15,000 $28 x 15,000 $ 1,80,000 $ 4,20,000 Testing components 6,67,000 $ $ 5,20,260.00 667 667 667 667 1,000 $ 666.67 x 1000 780 $ 666.67 x 780 10 $ 666.67 x 1000 10 $ 666.67 x 1000 6,670.00 $ 6,670.00 Rreording Components 1,80,000 $ $ 3,000 3,000 60 $3000 x 60 40 $3000 x 40 1,20,000 $ Total Cost Total Quantity Unit Cost 20,47,000 $ 26,00,660 $ 1,20,000 | 75,400 17.06 $ 34.49 $ 1,86,670 $ 4,26,670 15,000 15,000 12.44 $ 28.44 $ Activity Testing activity Reordering Activity Total Cost Total Number of activity $ 12,00,000 (1000+780+10+10) =1800 $ 3,00,000 (60+40+0+0) = 100 Cost per Activity 667 3,000