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Seabrook Company manufactures cooling systems. Seabrook produces all the parts necessary for its product except for one electronic component, which is purchased from two local
Seabrook Company manufactures cooling systems. Seabrook produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Wood Inc. and Forest Company. Both suppliers are reliable and seldom deliver late; however, Wood sells the component for $89 per unit, whereas Forest sells the same component for $86. Seabrook purchases 80% of its components from Forest 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 *Sampling inspections for Wood'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: In your calculations, round any unit cost to two decimal places and use rounded amounts in subsequent computations. Round you final answers to two decimal places.) \begin{tabular}{lll} Wood Inc. & $ & per unit \\ Forest Company & $ & per unit \end{tabular} 2a. Suppose that Seabrook loses $5,000,000 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. Round any per unit rate to two decimal places in your computations. Round your final answers to the nearest dollar. Wood q Forest
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