Activity$-$Based Supplier Costing

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 supplier$-$related activities and suppliers:

I. Activity Data

Sampling inspection for Manzer's product has been reduced because the reject rate is so low.

Required:

to two decimal places.$)$

$2$a$.$ Suppose that Noguchi loses $$3,808,000$ 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.

Manzer

$x$

Buckner

$2$b$.$ By how much would this change the cost of each supplier's component? Round your answers to the nearest cent.

Manzer unit cost increase $$

Buckner unit cost increase $$

Based on the analysis in Requirements $1$ and $2,$ discuss the importance of activity$-$based supplier costing for internal decision making.

component can be increased.