arena company uses a traditional activity-based costing systeknto manage the relationship with its suppliers. it estimates that the time purchasing and logistics staff spend dealing witj suppliers and the theoretica capacity for different cost drivers are as follows:

second part to the question

QUESTION 1 Arena Company uses a traditional activity-based costing system to manage the relationships with its suppliers. It estimates that the time purchasing and logistics staff spend dealing with suppliers and the theoretical capacity for different cost drivers are as follows: ACTIVITY TIME ESTIMATED COST DRIVER PERCENTAGE QUANTITY (THEORETICAL CAPACITY) Placing orders 60% 8.000 orders Quality inspection for incoming 20% 2,500 Inspections orders Evaluation of supplier 20% 40 evaluations performance 100% The total cost of purchasing and logistics activities is 200,000. For the two largest suppliers, Arena Company holds the following information, SUPPLIER A SUPPLIER B 1 Average price of 3.00 5.00 purchased goods (per unit) Orders placed 1,000 500 Quality inspections 400 200 Performance evaluations 1 During the accounting period under consideration, Arena Company has purchased 10,000 units from supplier A and 6,000 units from supplier B. Required: a) Assuming that the purchasing and logistics function operates at full capacity. use the information above to calculate the total cost of ownership (TCO) per unit for the two suppliers (15 Marks) b) Calculate the supplier performance index (SPI) for the two suppliers 15 Marks) Required: a) Assuming that the purchasing and logistics function operates at full capacity, use the information above to calculate the total cost of ownership (TCO) per unit for the two suppliers. (15 Marks) b) Calculate the supplier performance index (SPI) for the two suppliers. (5 Marks) PTO Page 2 of 5 Xyzzy... XYZZY c) How can Arena Company use the SPI to manage the relationship with the two suppliers? (5 Marks) d) Give some examples of other performance indicators that can be used to evaluate the performance of suppliers and describe how they relate to the SPI. Discuss how higher or lower performance along the chosen indicators can translate into higher and lower SPl performance