Activity-Based Supplier Costing Bowman Company manufactures cooling system. Bowman produces all the parts necessary for its product except for one electronic component which purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom elverlates however, Marzer sell the component for s89 per unit while Buckner sells the same component for $86. Bowman purchases 80% of its components from Buckner 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 suppliers I. Activity Data Activity Cost Inspecting components (samping only Reworking products (due to failed component) Warranty work to fed component) 5700.000 5.870,000 11,170,000 11. Super Data Manzer Inc. Buckner Company Unit porno Unes purchased Sampling hours BOD/000 1,200.000 1.920 5.640 works GUAN Rework hours 360 5,640 Warranty hours 300 15,200 Sampling inspection for Manaroduct has been reduced because there Required: 1. culate the cost per component for each supplier, taking into consideration the costs of the supplier related activities and using the current processed sales volume. (Note: Round the intermediate calculations to the whole number for the following activity rates: "Reworking products and "Warranty Round the unit cost to two decimal places) Manzer Inc. per unit Buckner Company per unit 2. Suppose that Bowman loses $5,680,000 in sales per year because it develops a poor reputation due to detective units attributable to failed components using warranty hours, assign the cost of fost sales to each supplier. Manzer Buckner 2b. By how much would this change the cost of each suppler'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 makes without coaccuratenment of costs to the cost object sential for well-rounded decision making Suppliers can alimtam Manzer Buckner 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 on internal activities to see if the quality of its component can be increased