Blackburn Inc. uses Otavalo Manufacturing and Piura Company to buy two precision machined parts used in the manufacture of its permanent-magnet motors: Part #625 and Part #827. Consider two activities: testing parts and reordering parts. After the two parts are inserted, testing is done to ensure that the two parts work as intended. Reordering occurs because one or both of the parts have failed the test and it is necessary to replenish part 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 parts........................$4,500,000

Reordering parts......................1,125,000

II. Supplier Data

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

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Otavalo Manufacturing Piura Company Part #625 $30 450,000 4,500 225 Part #827 $78 225,000 2,925 150 Part #625 $36 56,250 39 0 Part #827 Unit purchase price Units purchased Failed tests Number of reorders $84 56,250 36 0