Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Davis Fabricators buys metal for manufacturing from two suppliers, Alpha Metals and First Parts. If the metal is delivered late, the shipment to the customer

Davis Fabricators buys metal for manufacturing from two suppliers, Alpha Metals and First Parts. If the metal is delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Davis to reimburse a portion of the purchase price to the customer.

During the past quarter, the purchasing and delivery data for the two suppliers showed the following:

Alpha First Total
Total purchases (tons) 11,000 7,500 18,500
Average purchase price $ 10.00 $ 10.00 $ 10.00
Number of deliveries 84 16 100
Percentage of late deliveries 25 % 5 % 22 %

The accounting department recorded $40,625 as the cost of late deliveries to customers.

Required:

Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. What is the effective price for metal from the two companies when late deliveries are considered? (Do not round your intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Alpha First
Effective cost per ton $ $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

Define income. Distinguish income from cash flow. Discuss.

Answered: 1 week ago

Question

=+b. Prepare a note disclosure relating to this incident.

Answered: 1 week ago