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Problem 3- Bowman Company manufactures cooling systems. Bowman produces all the parts necessary for its product except for one electronic component, which is purchased from

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Problem 3-\" Bowman Company manufactures cooling systems. Bowman 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 PE? per unit while Buckner sells the same component for P815. Bowman purchases 30% 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 Activity Costs Inspecting components {sampling only} P 430,000 Reworking produce {due to tailed components] 5,034,000 Warranty work {due to failed component} 9,600,000 ll. Supplier Data Manzer Inc. Buckner Company Units purchase price FE\"? F Units purchased 303,030 3.200% Sampling hours 00 3.920 Rework hours 300 5.040 Warranty hours I100 15,200 Sampling inspection for Manzer's products has been reduced because the reject rate is so low. Required: 1. Compute the cost per component for each supplier, taking into considerationthe costs of the supplier-related activities and using the current prices and sales volume. {round the unit cost to two decimal places}. 2. Suppose that Bowman loses P4,000,000 in sales per year because it develops a poor reputation clue to defective units attributable to failed components. Using warranty hours, assign the cost of lost sales to each supplier. By how much would this change the cost of each supplier's component? {round to two decimal places}. 3. Based on the analysis on Requirement 1 and 2, discuss the importance of activity-based supplier costing for internal decision making

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