ctivity-Based Supplier Costing Sowman 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 dellver 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 1. Calculate the cost per component for each supplier, taking into consideration the costs of the supplier-related activities and using the current prices and sales volume. (Note: Round the intermediate calculations to the whole number for the following activity rates: "Reworking products" and "Warranty work". Round the unit cost to two decimal places.) 2a. Suppose that Bowman loses $3,472,000 in sales per year because it develops a poor reputation due to defective units attributable to falled components. Using warranty hours, assign the cost of lost sales to each supplier. Manzer Buckner 2b. By how much would this change the cost of each supplier's component? Round your answers to the nearest cent. Manzer Buckner 3. Based on the analivsis in Requirements 1 and 2 , discuss the impertance of activity based supplier costing for internal decision making: As with product costing, accurate assignment of costs to the cost object is essential for weil-grounded decision making. Suppliers can cause a firm to Derform costly activities such as inspection, rework, and warranty work. The purchase price. As this exampie shows, the component with the of a component is thus more than its on internal costiy activities, Twus, the company would likely price is actually less expensive bectuse it causes less demand might attempt to work with the one supplier which is causing significant demands on intemai acovities to see if the puality of its camponent can be increased