PROBLEM C)

probelm info:

Suppose that Stillwater Designs has two classes of distributors: JIT distributors and nonJIT distributors. The JIT distributor places small, frequent orders, and the nonJIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customerrelated activities and costs for the most recent quarter: JIT Non-JIT Distributors Distributors Sales orders 900 90 Sales calls 70 70 Service calls 350 175 Average order size 550 5,500 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,530,000 Selling goods 1,120,000 Servicing goods 1,050,000 Total $5,700,000 1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar. JIT Non-JIT 3;: $:1 3;: $:] 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar. Total $:] $:] For nonJIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent. 15:] per unit 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 supplierrelated 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 Manzer Inc. Unit purchase price $89 Units purchased 800,000 Sampling hours* 80 Rework hours 360 Warranty hours 800 Activity Cost $725,000 8,420,000 9,670,000 Buckner Company $86 3,200,000 3,920 5,640 15,200 * Sampling inspection for Manzer's product has been reduced because the reject rate is so low. 1. Calculate the cost per component for each supplier, taking into consideration the costs of the supplier-related activities and using the current prices and sales volume. (Note: Round the intermediate calculations to the whole number for the following activity rates: "Reworking products" and "Warranty work". Round the unit cost to two decimal places.) Manzer Inc. 15:] per unit Buckner Company 13:] per unit 2a. Suppose that Noguchi loses $5,248,000 in sales per year because it develops a poor reputation due to defective units attributable to failed components. Using warranty hours, assign the cost of lost sales to each supplier. 2;: 2b. By how much would this change the cost of each supplier's component? Round your answers to the nearest cent. Manzer unit cost increase v J $:] Buckner unit cost increase v J $:]