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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
ActivityBased Supplier Costing
Blackburn Inc. uses Otavalo Manufacturing and Piura Company to buy two precision machined parts used in the manufacture of its permanentmagnet motors: Part # and Part # 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 $
Reordering parts
II Supplier Data
Line Item Description Otavalo
Manufacturing
Part # Otavalo
Manufacturing
Part # Piura
Company
Part # Piura
Company
Part #
Unit purchase price $ $ $ $
Units purchased
Failed tests
Number of reorders
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 # $fill in the blank $fill in the blank
Part # $fill in the blank $fill in the blank
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