Noguchi Company manufactures cooling systems. Noguchi produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 per unit, while Buckner sells the same component for $86. Noguchi purchases 80% of its components from Buckner because of its lower price. The total annual demand is 4,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier-related activities and suppliers: I. Activity Data Inspecting components (sampling only) Reworking products (due to failed component) Warranty work (due to failed component) II. Supplier Data Activity Cost $625,000 7,570,000 12,370,000 Buckner Manzer Inc. Company Unit purchase price: $89 $86. Units purchased 800,000 3,200,000 Sampling hours 80 3,920 Rework hours 360 5,640 Warranty hours 800 15,200 Sampling inspection for Manzer's product has been reduced because the reject rate is so low