Ch11HWSolutionE11-3

# Ch11HWSolutionE11-3 - CHAPTER 11 Strategic cost management...

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CHAPTER 11 Strategic cost management 11–3 1. Supplier cost: First, calculate the activity rates for assigning costs to suppliers: Inspecting components: \$1,200,000/1,000 = \$1,200 per sampling hour Expediting work: \$960,000/100 = \$9,600 per order Reworking products: \$6,844,500/1,500 = \$4,563 per rework hour Warranty work: \$21,600,000/4,000 = \$5,400 per warranty hour Next, calculate the cost per component by supplier: Supplier cost: Grayson Lambert Purchase cost: \$144 × 200,000 ...................... \$28,800,000 \$129 × 800,000 ...................... \$103,200,000 Inspecting components: \$1,200 × 20 ............................ 24,000 \$1,200 × 980 .......................... 1,176,000 Expediting work: \$9,600 × 10 ............................ 96,000 \$9,600 × 90 ............................ 864,000 Reworking products: \$4,563 × 90 ............................ 410,670 \$4,563 × 1,410 ....................... 6,433,830 Warranty work: \$5,400 × 200 .......................... 1,080,000 \$5,400 × 3,800 ....................... 20,520,000 Total supplier cost .................... \$30,410,670 \$132,193,830 Units supplied ...........................

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