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Activity - Based Supplier Costing Blackburn Inc. uses Otavalo Manufacturing and Piura Company to buy two precision machined parts used in the manufacture of its

Activity-Based Supplier Costing
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
Line Item Description Otavalo
Manufacturing
Part #625 Otavalo
Manufacturing
Part #827 Piura
Company
Part #625 Piura
Company
Part #827
Unit purchase price $30 $78 $36 $84
Units purchased 450,000225,00056,25056,250
Failed tests 4,5002,9253936
Number of reorders 22515000
Required:
Determine the cost of each supplier by using ABC. Round unit costs to two decimal places.
Line Item Description Otavalo Manufacturing Piura Company
Part #625 $fill in the blank 1 $fill in the blank 2
Part #827 $fill in the blank 3 $fill in the blank 4

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