1. Fame Company manufactures engines. Fame produces all the parts necessary for its engines, except for one electronic component, which is purchased from two local suppliers: Hydra International and Parable Company. Both suppliers are reliable and rarely deliver late. Hydra sells the component for $12.00 per unit, while Parable sells the same component for $10.00. Fame purchases 80% of its components from Parable because of the lower price it offers. The total annual demand is 95,000 units.

   I. Activity Data
   	Activity Cost
   Inspecting components (sampling only)	$ 210,000
   Reworking products (due to failed component)	$2,454,000
   Warranty work (due to failed component)	$1,923,000

   II. Supplier Data
   	Hydra	Parable
   	International	Company
   Unit purchase price	$12.00	$10.00
   Units purchased	19,000	76,000
   Sampling hours	60	2,600
   Rework hours	150	3,800
   Warranty hours	550	7,000

   Calculate the activity rate for warranty work based on warranty hours. (Note: Round answer to the nearest dollar.)

   	a.	$264 per hour
   	b.	$268 per hour
   	c.	$262 per hour
   	d.	$255 per hour
   	e.	$287 per hour