Activity$-$Based Supplier Costing

total annual demand is $4,000,000$ components.

To help assess the cost effect of the two components, the following data were collected for supplier$-$related activities and suppliers:

I. Activity Data

Activity Cost

II$.$ Supplier Data

Manzer Inc.

Buckner

Company

Sampling inspection for Manzer's product has been reduced because the reject rate is so low.

Required:

the following activity rates: "Reworking products" and "Warranty work". Round the unit cost to two decimal places.$)$

Manzer Inc. $,$ :

jer unit

Buckner Company

per unit

Manzer $

Buckner $

$2$b$.$ By how much would this change the cost of each supplier's component? Round your answers to the nearest cent.

Manzer

Buckner

Based on the analysis in Requirements $1$ and $2,$ discuss the importance of activity$-$based supplier costing for internal decision making.

of a component is thus more than its purchase price. As this example shows, the component with the

price is actually less expensive because it causes less demand on internal costly activities.

Thus, the company would likely

of its component can be increased.