Seabrook Company manufactures heating 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 $48 per unit, while Forest sells the same component for $43. Seabrook purchases 80 percent of its components from Forest because of its lower price. The total annual demand is 2,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier-related activities and suppliers: Activity Data: - Inspecting components (sampling only) Activity Cost $240,000 - Reworking products (due to failed component) Activity cost $3,042,000 - Warranty Work (due to failed component) $4,800,000 Supplier Data: -Unit purchase price Woods Inc. $48, Forest Company $43 -Units Purchased Woods Inc. 400,000, Forest Company 1,600,000 -Sampling Hours* Woods Inc. 40, Forest Company 1,960 -Rework Hours Woods Inc. 180, Forest Company 2,820 -Warranty Hours Woods Inc, 400, Forest Company 7,600 * Sampling Inspection for Wood's products has been reduced because the reject rate is so low Required: 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. Round the unit cost to two decimal places. 2. Suppose that Seabrook loses $2,000,000 in sales per year because of the reputation effect of 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?