Exercise 10-28 Activity-Based Costing of Suppliers (L.O. 3, 4)
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Exercise 10-28 Activity-Based Costing of Suppliers (L.O. 3, 4)
Davis Fabricators buys metal for manufacturing from two suppliers, Alpha Metals and First Parts. If the metal is delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Davis 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:
Alpha
First
Total
Total purchases (tons)
11,000
5,500
16,500
Average purchase price
$
10.00
$
16.00
$
12.00
Number of deliveries
80
20
100
Percentage of late deliveries
25
%
5
%
21
%
The accounting department recorded $32,670 as the cost of late deliveries to customers.
Required:
Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. What is the effective price for metal from the two companies when late deliveries are considered? (Do not round your intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)
Alpha
First
Effective cost per ton
$
$
[Solved] Exercise 10-28 Activity-Based Costing of Suppliers (L.O. 3, 4)
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- Submitted On 19 Nov, 2016 08:54:06
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