Clearsound uses Alpha Electronics and La Paz Company to buy two electronic components used in...
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Accounting
Clearsound 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 activities: testing components 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:
Activity Costs Caused by Suppliers (testing failures and reordering as a result)
Activity
Costs
Testing components
$1,200,000
Reordering components
300,000
Supplier Data
Alpha Electronics
La Paz Company
125X
30Y
125X
30Y
Unit purchase price
$10
$26
$12
$28
Units purchased
120,000
60,000
15,000
15,000
Failed tests
1,200
780
10
10
Number of reorders
60
40
0
0
Required:
Determine the cost of each supplier by using ABC. Round unit costs to two decimal places.
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