Solution-Determine the cost of each supplier by using abc

Determine the cost of each supplier by using abc

Reference no: EM131790625

Assignment

Activity-Based Supplier CostingLissenPhones 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 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	$1,500,000
Reordering components	375,000

II. Supplier Data

	Alpha Electronics		La Paz Company
	125X	30Y	125X	30Y
Unit purchase price	$10	$26	$12	$28
Units purchased	150,000	75,000	18,750	18,750
Failed tests	1,500	975	13	12
Number of reorders	75	50	0	0

Required: Determine the cost of each supplier by using ABC. Round unit costs to two decimal places.

Reference no: EM131790625

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Determine the cost of each supplier by using abc

Reference no: EM131790625

Reference no: EM131790625

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