Beadco Company sells necklaces of beads and is trying to determine the costs of working with each supplier. One supplier of ceramic beads operates in Kenya. During the year, the supplier is expected to sell Beadco 1 million beads at a cost of CDN\($0.10.\)bead The year’s supply of beads is normally sent in a container, which costs

\($5,000\) (CDN) to ship to the company in Vancouver. With 1 million beads, the container is only half full. There would be no additional freight charges if the container were full.

To make the order with the Kenyan company, Beadco must send a purchasing agent to Kenya. The cost of the trip including the salary of the purchasing agent is \($10,000

(CDN).\) The processing of the purchase order also requires they use 20 hours of personnel time, which includes time spent by the accountant and the treasurer. The average cost per hour for these personnel is \($50\) (CDN). When the beads arrive, each bead must be inspected for quality and breakage. An inspector who is paid CDN\($20\) hour can inspect 1,000 beads per hour.

a. What is the fixed cost per bead of working with the Kenyan supplier if 1 million beads are purchased?

b. What is the variable cost per bead purchased from the Kenyan supplier?

c. If 1.5 million beads were purchased, what would be the total costs of purchasing from the Kenyan supplier?