. Tulsa Company is a car brake repair and replacement company operating in the after-sales market. Tulsa's purchasing manager uses two suppliers (Stridulo and Fallimento) for the source of its passenger car brakes. Data relating to brake discs (Discs) and brake pads (Pads) are given below. I. Activity Costs Activity Adverse buying $800,000 100,000 Supplier returns** "Extra cost of purchasing from local car dealer because of insufficient delivery of supplier. **Brakes returned because they were not ordered or because they were defective. II. Supplier Data Unit purchase price Units purchased Insufficient units Returned units Required: Stridulo Brakes Pads Discs $53.75 10,000 Discs $ Pads 2,000 500 $148.75 10,000 2,000 500 Fallimento Brakes Discs Pads $46.50 $146.50 15,000 15,000 6,000 6,000 1,500 1,500 1. Calculate the activity rates for assigning costs to suppliers. Adverse buying rate per adverse purchase Supplier return rate. per return. 2. Calculate the total unit purchasing cost for each component for each supplier. Total unit cost Stridulo Brakes Fallimento Brakes
. Tulsa Company is a car brake repair and replacement company operating in the after-sales market. Tulsa's purchasing manager uses two suppliers (Stridulo and Fallimento) for the source of its passenger car brakes. Data relating to brake discs (Discs) and brake pads (Pads) are given below. I. Activity Costs Activity Adverse buying $800,000 100,000 Supplier returns** "Extra cost of purchasing from local car dealer because of insufficient delivery of supplier. **Brakes returned because they were not ordered or because they were defective. II. Supplier Data Unit purchase price Units purchased Insufficient units Returned units Required: Stridulo Brakes Pads Discs $53.75 10,000 Discs $ Pads 2,000 500 $148.75 10,000 2,000 500 Fallimento Brakes Discs Pads $46.50 $146.50 15,000 15,000 6,000 6,000 1,500 1,500 1. Calculate the activity rates for assigning costs to suppliers. Adverse buying rate per adverse purchase Supplier return rate. per return. 2. Calculate the total unit purchasing cost for each component for each supplier. Total unit cost Stridulo Brakes Fallimento Brakes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Activity-Based Supplier Costing
Transcribed Image Text:**Activity-Based Supplier Costing**
Tulsa Company is a car brake repair and replacement company operating in the after-sales market. Tulsa’s purchasing manager uses two suppliers (Stridulo and Fallimento) for the source of its passenger car brakes. Data relating to brake discs (Discs) and brake pads (Pads) are given below.
### I. Activity Costs
**Activity**
- Adverse buying* $800,000
- Supplier returns** $100,000
*Extra cost of purchasing from local car dealer because of insufficient delivery of supplier.
**Brakes returned because they were not ordered or because they were defective.
### II. Supplier Data
| | **Stridulo Brakes** | | **Fallimento Brakes** |
|-----------------------|---------------------|--------------|-----------------------|
| | **Discs** | **Pads** | **Discs** | **Pads** |
| **Unit purchase price** | $53.75 | $148.75 | $46.50 | $146.50 |
| **Units purchased** | 10,000 | 10,000 | 15,000 | 15,000 |
| **Insufficient units** | 2,000 | 2,000 | 3,000 | 3,000 |
| **Returned units** | 500 | 500 | 1,500 | 1,500 |
### Required:
1. Calculate the activity rates for assigning costs to suppliers.
- Adverse buying rate: $___________ per adverse purchase
- Supplier return rate: $___________ per return
2. Calculate the total unit purchasing cost for each component for each supplier.
| | **Total unit cost** |
|------------------|---------------------|
| **Stridulo Brakes** | |
| Discs | $ |
| Pads | $ |
| **Fallimento Brakes** | |
| Discs | $ |
| Pads | $ |
This exercise involves calculating activity-based costs, which helps in understanding the financial impact of inefficiencies such as supplier-related delays and returns on product costs.
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