Activity-Based Supalier Costing Bowman Company manufactures cooling systems. Bowman produces all the parts necessary for its product except for one electronic component, which is purchased from two local supgliers: Manzer Inc. and Buckner Company. Both suppliers are rellable and seldom dellver late; however, Manzer selis the component for $89 per unit, while Buckner selis the same component for $86. Bowman purchases 80% of its components from Blickner because of its lower price. The 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 suppliners: - Sampling hapection fer Manier's peoduct has been resuced becoute the reject rate an so lem. Required: 1. Calculate the cost per component foc each supplier, taking into consideration the costs of the supplier-reiated activities and using the current prices and sales wolume. (Note: Round the intermediate calculations to the whole number for the following activity rates: "Reworking products" and "Warranty work", Round the unit cost to two decimal places.) 2a. Suppose that Bowman lotes 43,456,000 in sales per year becouse it develops a poor reputation due to defective units attributable to failed components, Using warrarty hours, atsign the cost of last sales ?o each supplier. Manzer Buckner 2b. By how much would this change the cost of each supplier's component? Round yeur answers to the nearest cent. Manzer Buckner 5 3. Based on the analysis in Requirements 1 and 2 , discuss the importance of activity-based supplier costing for internal decision making. 2b. By how much would this change the cost of each supplier's component? Round your answers to the nearest cent. Manzer Buckner 3. Based on the analysis in Requirements 1 and 2, discuss the importance of activity-based supplier costing for internal decision making. As with product costing, accurate assignment of costs to the cost object is essential for well-grounded decision making. Suppliers can cause a firm to perform costly activities such as inspection, rework, and warranty work. The 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 the purchases of the one supplier in favor of the other. It also might attempt to work with the one supplier which is causing significant demands \& Internal activities to see if the quality of its component can be increased