Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4) [The following information applies to the questions displayed below.] Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon 5,000 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. The Accounting Department recorded $245,700 as the cost of late deliveries to customers. Hessel 3,000 $ 188 20 15% $ 172 40 30% Indifference point Total 8,000 $ 178 60 25% Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. Also assume that the number of components is the same for all deliveries from either company. % Required: What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio and Video? Note: Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (i.e., .3212 as 32.12).
Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4) [The following information applies to the questions displayed below.] Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon 5,000 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. The Accounting Department recorded $245,700 as the cost of late deliveries to customers. Hessel 3,000 $ 188 20 15% $ 172 40 30% Indifference point Total 8,000 $ 178 60 25% Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. Also assume that the number of components is the same for all deliveries from either company. % Required: What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio and Video? Note: Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (i.e., .3212 as 32.12).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4)
[The following information applies to the questions displayed below.]
Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from
two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are
delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for
WES to reimburse a portion of the purchase price to the customer.
During the past quarter, the purchasing and delivery data for the two suppliers showed the following:
Bacon
5,000
$ 172
40
30%
Hessel
3,000
$188
Total purchases (cartons)
Average purchase price (per carton)
Number of deliveries
Percentage of cartons delivered late.
The Accounting Department recorded $245,700 as the cost of late deliveries to customers.
Indifference point
Total
8,000
$ 178
60
25%
20
15%
Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4)
Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in
the past. Also assume that the number of components is the same for all deliveries from either company.
%
Required:
What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio
and Video?
Note: Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (i.e., .3212 as
32.12).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5383c32-5c24-4ce2-bef4-fdf9e0bd3215%2F29876724-0857-45de-a8ee-27ae5d0d2ef2%2Ffogua9s_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4)
[The following information applies to the questions displayed below.]
Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from
two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are
delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for
WES to reimburse a portion of the purchase price to the customer.
During the past quarter, the purchasing and delivery data for the two suppliers showed the following:
Bacon
5,000
$ 172
40
30%
Hessel
3,000
$188
Total purchases (cartons)
Average purchase price (per carton)
Number of deliveries
Percentage of cartons delivered late.
The Accounting Department recorded $245,700 as the cost of late deliveries to customers.
Indifference point
Total
8,000
$ 178
60
25%
20
15%
Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4)
Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in
the past. Also assume that the number of components is the same for all deliveries from either company.
%
Required:
What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio
and Video?
Note: Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (i.e., .3212 as
32.12).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education