Question

Can someone please help me with this asap!

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 30Y. 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 Reordering components $1,200,000 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X30Y 125x $10 120,000 $12 Unit purchase price Units purchased $28 30Y $26 77,200 780 40 15,000 15,000 Failed tests 1,000 60 Number of reorders 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 125x 30Y 11.63 x $ La Paz Company 125X 30Y 0.01 * $ 28.01 x Unit cost: $ $

Answer 1

Answer: Alpha electronics 125X 30Y $17.06 $34.29 La Paz company 125X 30Y $12.44 $28.44 Unit cost Workings: Activity Cost Pool Testing Reordering Cost Driver tests reorders Activity Cost $1,200,000 $300,000 Volume Activity Rate 1,800 $667 ($1200000 / 1800] 100 $3,000 ($300000 / 100] NOTE: Volume for tests = 1000 + 780 + 10 + 10 = 1800; Volume for reorders = 60 + 40 + 0 + 0 = 100. Rate Therefore, Activity Activity Activity Activity costs assigned to 125X (Alpha electronics): Usage Cost Testing tests $667 1,000 $667,000 ($667 x 1000] Reordering reorders $3,000 60 $180,000 ($3000 x 60] Activity costs assigned to 125X (Alpha electronics): $847,000 Purchase cost $1,200,000 [120000 x $10] Total cost allocated $2,047,000 Units purchased 120,000 Unit cost $17.06 ($2047000 / 120000 units]

Activity Activity Activity Activity costs assigned to 30Y (Alpha electronics): Rate Usage Cost Testing $667 7 80 $520,260 ($667 x 780] Reordering $3,000 40 $120,000 [$3000 x 40] Activity costs assigned to 30Y (Alpha electronics): $640,260 Purchase cost $2,007,200 [77200 x $26] Total cost allocated $2,647,460 Units purchased 77,200 Unit cost $34.29 [$2647460 / 77200 units] Activity Activity Activity costs assigned to 125X (La Paz company): Rate Usage Testing $667 10 Reordering $3,000 0 Activity costs assigned to 125X (La Paz company): Purchase cost Total cost allocated Units purchased Unit cost Activity Cost $6,670 ($667 x 10] $0 ($3000 x 0] $6,670 $180,000 (15000 x $12] $186,670 15,000 $12.44 ($186670 / 15000 units]

10 Activity Activity Activity costs assigned to 30Y (La Paz company): Rate Usage Testing $667 Reordering $3,000 0 Activity costs assigned to 30Y (La Paz company): Purchase cost Total cost allocated Units purchased Unit cost Activity Cost $6,670 ($667 x 10] $0 $3000 x 0] $6,670 $420,000 (15000 x $28] $426,670 15,000 $28.44 ($426670 / 15000 units]