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.