Question

MEMETODOLOMIOOTILBUXUL + a ssignment Assignment in doinvor - Assignment Session Locator Sinprogress-false Fame Company manufactures engines. Fame produces all the parts necessary for its engines, except for one electronic component, which is u sed from a local suppliers Hydra International and Parable Company. Both suppliers are reliable and rarely deliver late Hydra sells the component for $12.00 per un while Parabieses the same component for $10.00. Fame purchases 30% of its components from Parable because of the lower price offers. The total anual demand is 95,000 units L Activity Data Inspecting components (arting only) Rworking products due to failed component) Warranty work (due to component) II. Supplier Daca Unit purchase price Ut purchased Sampling hours 3.800 Suppose that Fame loses $3,500,000 in sales per year because of its reputation for defective units attributable to falled components. Using warranty hours, assign the proportional cost of lost sales to Hydra International. What is the increase in the cost per component? (Note: Round the lost sales per warranty hour and the cost of the component to two decimal places.) Ca. 54.65 per unit Ce $25.72 per unit Cd. $13.42 perunt Previous All work saved Subm Test for Grading

Answer 1

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Fame Company
Calculation of lost sales per warranty hour	Product A	Product B	Total	Note
Total Warranty Hours	550.00	7,000.00	7,550.00	A
Sales lost			3,500,000.00	B
Lost sales per warranty hour			463.58	C=B/A
Total manufacturing cost	Hydra			Note
Total Warranty Hours	550.00			D
Lost sales per warranty hour	463.58			See C
Total Lost sales	254,969.00			E=C*D
Units purchased	19,000.00			F
Increase in the cost per component	13.42			G=E/F
So answer is option d. $ 13.42.