Problem 10-71 (Static) Activity-Based Costing of Suppliers (LO 10-3, 4) Carrie Construction (CC) is a company specializing in building airport runways and major highways. As a part of its business, it receives supplies of aggregate (stone, sand, gravel, and so on) from two suppliers: Austin Aggregate and Granger Materials. The CC purchasing department has a preference for buying from Granger based on price but occasionally has to order from Austin when Granger cannot fill the order. Carrie Construction has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to CC, it goes through an initial inspection to assure it meets specification. If the load fails the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $3,000 per load. A secondary inspection, which is more thorough, costs $15,000 per load. If a delivery is delayed, Carrie has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $6,000. The following are summary statistics from last year's purchases from the two suppliers: Number of loads Average tons per load Average price per ton Granger Materials 600 Austin Aggregate 5,000 150 10,000 $ 7.20 Number of initial inspections passed Number of delayed deliveries 450 $ 8.00 120 141 15