Activity-Based Supplier 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 suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 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 Inspecting components (sampling only) Reworking products (due to failed component) Warranty work (due to failed component) II. Supplier Data Activity Cost $480,000 6,084,000 9,600,000 Buckner Company $86 3,200,000 3,920 5,640 15,200 Manzer Inc. Unit purchase price Units purchased Sampling hours* Rework hours Warranty hours Sampling inspection for Manzer's product has been reduced because the reject rate is so low Required $89 800,000 80 360 800