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Extemal Linkages, Activity-Based Suppler Costing Jackson, Inc, manufactures motorcycles, Jackson produces al the components necessary for the production of the cyeles except for one (a

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Extemal Linkages, Activity-Based Suppler Costing Jackson, Inc, manufactures motorcycles, Jackson produces al the components necessary for the production of the cyeles except for one (a carbureter). This component is purchased from two local suppliers: Harvey Parts and Curtis, Inc. Harver selis the component for $64 per unit, while Curtis selis the same compdnent for 358 . Because of the lower price, Jacksen purchases 75 pereent of its conponents from Curtis. Jackson purchases the remaining 25 percent from Harver to ensive an alternative source. The total annual demand is 169,000 carburetors. Harvey's sales manoger is puthing Jackson to purchase more of its units, arguing that its compcnent is of much hipher quairty and so should prove to be iess castiy than Curtis's lower-quality cemponent. Harvey has suficient capacity to supply all the carbureters needed and is asking for a long-term contract. With a five-year contract for 141,750 or mare units, herver will sell the component for $61 per unit with a contractual provision for an onnual product-specific inflationary adjustment. Jachson's purchashg manager is intrigued by the offer and wonders if the higher-quality carburetor actually does cost less than the iower-quabity curtis carburetor, To help asseus. the cost effect of the two preducts; the following data were collected for quality related activities and supplies: 1. Activity data: II. Supplier data: Warranty work (due to falled component) 1,742,670 11. Supplier data: *The Quality Control Department indicates that sampling inspection for the Harver component has been rebuced because the reject rate is so low. Required: 1. Calcutate the cout per component for each supplien, taking into convderation the coss of the qualityreiated activities and using the current prices and sales volume. reguired, round your unit cost answers to the nearest cent. Given this information, what do you think the purchasing manager ought to do? 2. The Quality Control Department estmates that the company loses $3,352,680 in sales per year because of the reputation effect of defective units attributable to failed components Suppose that you had to assign the cost of lost sales to each supplier using one of the drivers already listed. Which would you choose? Using this dirver, calculate the change in the unif cost of the Curtis carburetor attributable to lost sales. If required, round your answer to the nearest cent. per unit. 3. Select the type or types (Le, Descriptive, Diagnestic, Predictive, and Prescriptive) of data analytics that you conducted in respeoding to requirements 1 and 2 . (5ee Exhibits 2.5 and 2.6, pp. 37,40 , for a review of data analyeics types.)

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