Supplier evaluation and relevant costs of quality and timely deliveries. Copeland Sport- ing Goods is evaluating two suppliers of footballs, Big Red and Quality Sports. Pertinent information about each potential supplier follows:

REQUIRED Calculate the relevant costs of purchasing (1) from Big Red and (2) from Quality Sports using ; the format of Exhibit 20-6 (p. 979). From whom should Copeland buy footballs?

LO1

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Relevant Item Big Red Quality Sports Purchase price per unit (case) $ 60.00 $ 61.20 Ordering costs per order $ 7.20 $ 7.20 Inspection costs per unit $ 0.02 $ 0.00 Insurance, material handling, and so on per $ 4.00 $ 4.50 unit per year Annual demand 12,000 units 12,000 units Average quantity of inventory held during 100 units. 100 units the year Required return on investment 15% 15% Stockout costs per unit $ 24 $ 12 Stockout units per year 350 units 60 units Customer returns 300 units 25 units Customer-return costs per unit $ 30 $ 30