Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4)

[The following information applies to the questions displayed below.]

Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses the vendor based on price. Once the plastic is received, it is inspected to ensure that it is suitable for production. Plastic that is deemed unsuitable is disposed of.

The controller at Kinnear collected the following information on purchases for the past year:

	Tappan	Hill
Total purchases (tons)	5,000	9,000
Plastic discarded	100	495

The purchasing manager has just received bids on an order for 270 tons of plastic from both Tappan and Hill. Tappan bid $1,715 and Hill bid $1,701 per ton.

Exercise 10-38 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4)

Required:

1-a. Assume that the average quality, measured by the amounts discarded from the two companies, will continue as in the past. What is the effective cost per ton for both Tappan and Hill? (Do not round intermediate calculations.)

Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4)

[The following information applies to the questions displayed below.]

Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses the vendor based on price. Once the plastic is received, it is inspected to ensure that it is suitable for production. Plastic that is deemed unsuitable is disposed of.

The controller at Kinnear collected the following information on purchases for the past year:

	Tappan	Hill
Total purchases (tons)	5,000	9,000
Plastic discarded	100	495

The purchasing manager has just received bids on an order for 270 tons of plastic from both Tappan and Hill. Tappan bid $1,715 and Hill bid $1,701 per ton.

Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4)

Required:

a. Assume all else remains the same. What bid by Tappan would make Kinnear indifferent between buying from Tappan or Hill? (Do not round intermediate calculations. Round your answer to 2 decimal places.)