Vidrio Company is a car window repair and replacement company operating in the aftersales market. Vidrio’s purchasing manager uses two suppliers (Smith Glass and Wolf Glass) for the source of its passenger car windows. Data relating to side windows (Side)

and windshields (WS) are given below.

Required:
1. Calculate the activity rates for assigning costs to suppliers.
2. Calculate the total unit purchasing cost for each component for each supplier.
3. What if the quantity of side windows that can be purchased is limited to 10,000 units from Smith and 30,000 units from Wolf? There is no limit from either source for windshields. Based on cost, what purchasing mix should be chosen? What problem does this create? What else might you suggest if you were the manager of Vidrio?

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I. Activity Costs Activity Adverse buying* $350,000 Supplier returns** 60,000