Refer to the data In Exercise 10-30.

Required

Assume all else remains the same. What percentage of late deliveries by Alpha would make Davis indifferent between buying from Alpha Metals and First Parts?

Exercise 10-30:

Activity-Based Costing of Suppliers Davis Fabricators buys metal for manufacturing from two suppliers, Alpha Metals and First Parts, if the metal is delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Davis to reimburse a portion of the purchase price to the customer.

During the past quarter, the purchasing and delivery data for the two suppliers showed the following:

The Accounting Department recorded: $22,400 as the cost of late deliveries to customers.

Total purchases (tons) Average purchase price Number of deliveries. . . . . Percentage of late deliveries ... Alpha 10,000 $ First 6,000 10.00 $ 80 25% 12.00 20 5% Total 16,000 $ 10.75 100 21%