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* 729,000 Supplier returns** 100,100

* 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 35,000 35,000 Insufficient units 750 750 3,300 3,300 Returned units 425 425 1,500 1,500

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 $ $