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: Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. Bacon 5,000 $ 192 40 30% Bacon Hessel Hessel 3,000 $ 208 20 15% Effective Cost Per Carton Total 8,000 $198 The Accounting Department recorded $265,200 as the cost of late deliveries to customers. 60 25% Required: 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. What is the effective price for cartons from the two companies when late deliveries are considered? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
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: Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. Bacon 5,000 $ 192 40 30% Bacon Hessel Hessel 3,000 $ 208 20 15% Effective Cost Per Carton Total 8,000 $198 The Accounting Department recorded $265,200 as the cost of late deliveries to customers. 60 25% Required: 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. What is the effective price for cartons from the two companies when late deliveries are considered? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$ 192
40
30%
Bacon
Hessel
Hessel
3,000
$ 208
Total purchases (cartons)
Average purchase price (per carton)
Number of deliveries
Percentage of cartons delivered late.
The Accounting Department recorded $265,200 as the cost of late deliveries to customers.
Effective Cost
Per Carton
Total
8,000
$ 198
20
15%
Required:
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. What is
the effective price for cartons from the two companies when late deliveries are considered?
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
60
25%
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