Figure 7-3. Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.

I. Activity Data
	Activity Cost
Inspecting components (sampling only)	$ 190,000
Reworking products (due to failed component)	$2,254,000
Warranty work (due to failed component)	$1,723,000

II. Supplier Data
	Traynor	Bello
	Inc.	Company
Unit Purchase Price	$10.00	$8.95
Units Purchased	22,500	52,500
Sampling Hours	50	2,450
Rework hours	135	3,625
Warranty hours	475	6,000

14. Refer to Figure 7-3. Calculate the activity rate for inspecting components based on sampling hours.

	a.	$78 per hour
	b.	$72 per hour
	c.	$77.25 per hour
	d.	$80 per hour
	e.	$76 per hour

15. Refer to Figure 7-3. Calculate the activity rate for reworking products based on rework hours. Round to the nearest whole dollar.

	a.	$599 per hour
	b.	$595 per hour
	c.	$602 per hour
	d.	$605 per hour
	e.	$622 per hour