Activity-Based Supplier Costing 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: I. Activity Costs Caused by Suppliers (testing failures and reordering as a result) Activity Costs Testing components $1,200,000 Reordering components 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit purchase price $10 $26 $12 $28 Units purchased 120,000 80,300 15,000 15,000 Failed tests 1,300 780 10 10 Number of reorders 60 40 Required: Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent. Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit cost: X

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Activity-Based Supplier Costing
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:
I. Activity Costs Caused by Suppliers (testing failures and reordering as a result)
Activity
Costs
Testing components
$1,200,000
Reordering components
300,000
II. Supplier Data
Alpha Electronics
La Paz Company
125X
30Y
125X
30Y
Unit purchase price
$10
$26
$12
$28
Units purchased
120,000
80,300
15,000
15,000
Failed tests
1,300
780
10
10
Number of reorders
60
40
Required:
Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent.
Alpha Electronics
La Paz Company
125X
30Y
125X
30Y
Unit cost:
Transcribed Image Text:Activity-Based Supplier Costing 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: I. Activity Costs Caused by Suppliers (testing failures and reordering as a result) Activity Costs Testing components $1,200,000 Reordering components 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit purchase price $10 $26 $12 $28 Units purchased 120,000 80,300 15,000 15,000 Failed tests 1,300 780 10 10 Number of reorders 60 40 Required: Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent. Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit cost:
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