Cornerstone Exercise 11.2 (Algorithmic) Activity-Based Supplier Costing

Ventana Company is a car window repair and replacement company operating in the after-sales market. Ventanas purchasing manager uses two suppliers (Jones Glass and Claro Glass) for the source of its passenger car windows. Data relating to side windows (Side) and windshields (WS) are given below.

I. Activity costs

Activity
Adverse buying*	697,500
Supplier returns**	74,100

* Extra cost of purchasing from local car dealer because of insufficient delivery of supplier. ** Windows returned because they were not ordered or because they were defective.

II. Supplier Data

	Jones Glass							Claro Glass
	Side			WS				Side			WS
Unit purchase price		$70			$145				$67			$142
Units purchased		20,000			20,000				30,000			30,000
Insufficient units		1,050			1,050				3,600			3,600
Returned units		425			425				1,000			1,000

Required:

1. Calculate the activity rates for assigning costs to suppliers.

Adverse buying rate	$	per adverse purchase
Supplier return rate	$	per return

2. Calculate the total unit purchasing cost for each component for each supplier. If required, round your answers to the nearest cent.

	Total unit cost
	Jones Glass	Claro Glass
Side	$	$
WS	$	$