Noguchi Company manufactures cooling systems. Noguchi produces all the parts necessary for its product except for one
Question:
Noguchi Company manufactures cooling systems. Noguchi produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc. and Buckner Company. Both suppliers are reliable and seldom deliver late; however, Manzer sells the component for $89 per unit, while Buckner sells 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
| Line Item Description | Activity Cost |
|---|---|
| Inspecting components (sampling only) | $595,000 |
| Reworking products (due to failed component) | 6,570,000 |
| Warranty work (due to failed component) | 10,770,000 |
II.Supplier Data
| Line Item Description | Manzer Inc. | Buckner Company |
|---|---|---|
| Unit purchase price | $89 | $86 |
| Units purchased | 800,000 | 3,200,000 |
| Sampling hours* | 80 | 3,920 |
| Rework hours | 360 | 5,640 |
| Warranty hours | 800 | 15,200 |
* Sampling inspection for Manzer's product has been reduced because the reject rate is so low.
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. (Note: Round the intermediate calculations to the whole number for the following activity rates: "Reworking products" and "Warranty work". Round the unit cost to two decimal places.)
Manzer Inc. $____ per unit
Buckner Company $____ per unit
2a. Suppose that Noguchi loses $4,848,000 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 Inc. $____
Buckner Company $____
2b. By how much would this change the cost of each supplier's component? Round your answers to the nearest cent.
Manzer Inc. $____
Buckner Company $____
Expert Answer:
1 Calculate the cost per component for each supplier Manzer Inc Total cost Unit purchase price Activ... View the full answer
