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.