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Category > Accounting Posted 19 Aug 2017 My Price 9.00

La Paz Company

Cornerstone Exercise 7-34 Activity-Based Supplier Costing

 

LissenPhones uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125X and Component 30Y. Consider two activi- ties: testing and reordering components. After the two components are inserted, testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Activity cost information and other data needed for supplier costing are as follows:

 

I.     Activity Costs Caused by Suppliers (testing failures and reordering as a result)

 

Activity                                                Costs

 

 

 

 

Testing components                          $1,500,000 Reordering components      375,000

 

 

 

II.  Supplier Data

 

 

 

 

 

Alpha Electronics         La Paz Company 125X       30Y         125X       30Y

 

 

Unit purchase price                  $10             $26             $12             $28 Units purchased    150,000   75,000     18,750     18,750

 

Failed  tests                           1,500             975               13               12

 

Number of reorders                   75               50                 0                 0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                      Required:

Determine the cost of each supplier by using ABC. Round unit costs to two decimal

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Maurice Tutor
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Status NEW Posted 19 Aug 2017 02:08 PM My Price 9.00

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