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 $4$