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Problem 10-71 (Static) Activity-Based Costing of Suppliers (LO 10-3, 4) Carrie Construction (CC) is a company specializing in building airport runways and major highways. As a part of its business, it receives supplies of aggregate (stone, sand, gravel, and so on) from two suppliers: Austin Aggregate and Granger Materials. The CC purchasing department has a preference for buying from Granger based on price but occasionally has to order from Austin when Granger cannot fill the order. Carrie Construction has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to CC, it goes through an initial inspection to assure it meets specification. If the load falls the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $3,000 per load. A secondary Inspection, which is more thorough, costs $15,000 per load. If a delivery is delayed, Carrie has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $6,000. The following are summary statistics from last year's purchases from the two suppliers: Granger Materials Austin Aggregate Number of loads Average tons per load 600 150 5,000 10,000 Average price per ton $7.20 $ 8.00 Number of initial inspections passed 450 141 Number of delayed deliveries 120 15 Show Transcribed Text Required: Calculate the effective cost of a ton of aggregate from the two suppliers, assuming that last year's experience is representative Note: Round "Average effective cost per ton" answers to 2 decimal places. Item Granger Materials Austin Aggregate Total tons purchased Total purchase price Initial inspection costs Secondary inspection costs Delay costs Total costs $ 0 S 0 Average effective cost per ton

Problem 10-71 (Static) Activity-Based Costing of Suppliers (LO 10-3, 4) Carrie Construction (CC) is a company specializing in building airport runways and major highways. As a part of its business, it receives supplies of aggregate (stone, sand, gravel, and so on) from two suppliers: Austin Aggregate and Granger Materials. The CC purchasing department has a preference for buying from Granger based on price but occasionally has to order from Austin when Granger cannot fill the order. Carrie Construction has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to CC, it goes through an initial inspection to assure it meets specification. If the load falls the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $3,000 per load. A secondary Inspection, which is more thorough, costs $15,000 per load. If a delivery is delayed, Carrie has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $6,000. The following are summary statistics from last year's purchases from the two suppliers: Granger Materials Austin Aggregate Number of loads Average tons per load 600 150 5,000 10,000 Average price per ton $7.20 $ 8.00 Number of initial inspections passed 450 141 Number of delayed deliveries 120 15 Show Transcribed Text Required: Calculate the effective cost of a ton of aggregate from the two suppliers, assuming that last year's experience is representative Note: Round "Average effective cost per ton" answers to 2 decimal places. Item Granger Materials Austin Aggregate Total tons purchased Total purchase price Initial inspection costs Secondary inspection costs Delay costs Total costs $ 0 S 0 Average effective cost per ton

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 10-71 (Static) Activity-Based Costing of Suppliers (LO 10-3, 4) Carrie Construction (CC) is a company specializing in building airport runways and major highways. As a part of its business, it receives supplies of aggregate (stone, sand, gravel, and so on) from two suppliers: Austin Aggregate and Granger Materials. The CC purchasing department has a preference for buying from Granger based on price but occasionally has to order from Austin when Granger cannot fill the order. Carrie Construction has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to CC, it goes through an initial inspection to assure it meets specification. If the load fails the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $3,000 per load. A secondary Inspection, which is more thorough, costs $15,000 per load. If a delivery is delayed, Carrie has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $6,000. The following are summary statistics from last year's purchases from the two suppliers: Number of loads Average tons per load Average price per ton Number of initial inspections passed Number of delayed deliveries Show Transcribed Text Granger Materials Austin Aggregate 600 5,000 150 10,889 $ 7.20 $8.00 450 120 141 15 P Required: Calculate the effective cost of a ton of aggregate from the two suppliers, assuming that last year's experience is representative. Note: Round "Average effective cost per ton" answers to 2 decimal places. Item Total tons purchased Total purchase price Initial inspection costs Secondary inspection costs Delay costs Granger Materials Austin Aggregate Total costs $ 0 S 0 Average effective cost per ton
Transcribed Image Text:Problem 10-71 (Static) Activity-Based Costing of Suppliers (LO 10-3, 4) Carrie Construction (CC) is a company specializing in building airport runways and major highways. As a part of its business, it receives supplies of aggregate (stone, sand, gravel, and so on) from two suppliers: Austin Aggregate and Granger Materials. The CC purchasing department has a preference for buying from Granger based on price but occasionally has to order from Austin when Granger cannot fill the order. Carrie Construction has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to CC, it goes through an initial inspection to assure it meets specification. If the load fails the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $3,000 per load. A secondary Inspection, which is more thorough, costs $15,000 per load. If a delivery is delayed, Carrie has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $6,000. The following are summary statistics from last year's purchases from the two suppliers: Number of loads Average tons per load Average price per ton Number of initial inspections passed Number of delayed deliveries Show Transcribed Text Granger Materials Austin Aggregate 600 5,000 150 10,889 $ 7.20 $8.00 450 120 141 15 P Required: Calculate the effective cost of a ton of aggregate from the two suppliers, assuming that last year's experience is representative. Note: Round "Average effective cost per ton" answers to 2 decimal places. Item Total tons purchased Total purchase price Initial inspection costs Secondary inspection costs Delay costs Granger Materials Austin Aggregate Total costs $ 0 S 0 Average effective cost per ton
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