Complete Exercise 7-15 and fill in the blanks below:

Remember to enter numeric amounts without a $ or , (a comma). If the answer is $20,000.00, then enter the number as 20000. Remember to round to 2 decimal places. For numbers such as 1.456, round up to 1.46 and for numbers such as 1.452, round down to 1.45

Part 1:

Supplier costs:

Inspecting components activity rate $__________________________

per sampling hour.

Reworking products activity rate $_______________________________

per rework hour.

Warranty work activity rate $_________________________________

per warranty hour.

The cost per component by supplier is:

Wood total supplier cost is $______________________________________

.

Wood per unit cost if $___________________________________

Forest total supplier cost is $_________________________________

Forest per unit cost is $_________________________________________

Part 2:

Using warranty hours, the rate is $________________________

per warranty hour. The costs assigned to each component would be:

Wood $________________________________

Forest $________________________________

Exercise 7-15 Activity-Based Supplier Costing Seabrook Company manufactures heating systems. Seabrook produces all the parts OBJECTIVE 3 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 $43. Seabrook purchases 80 percent of its components from Forest because of its lower price. The total annual demand is 2,000,000 components. To help assess the cost effect of the two components, the following data were collected for supplier- related activities and suppliers: I. Activity Data Activity Cost ($) 240,000 3,042,000 Inspecting components (sampling only) Reworking products (due to failed component) Warranty work (due to failed component) 4,800,000 II. Supplier Data Wood Inc. Unit purchase price Units purchased Sampling hours * Rework hours Warranty hours $48 400,000 40 180 Forest Company $43 1,600,000 1,960 2,820 7,600 400