ctivity-Based Supplier Costing Ventana Company is a car window repair and replacement company operating in the after-sales market. Ventana’s purchasing manager uses two suppliers (Jones Glass and Claro Glass) for the source of its passenger car windows. Data relating to side windows (Side) and windshields (WS) are given below. I. Activity costs Activity Adverse buying* 696,000 Supplier returns** 79,800 * Extra cost of purchasing from local car dealer because of insufficient delivery of supplier. ** Windows returned because they were not ordered or because they were defective. II. Supplier Data Jones Glass Claro Glass Side WS Side WS Unit purchase price $60 $145 $57 $142 Units purchased 15,000 15,000 30,000 30,000 Insufficient units 750 750 3,600 3,600 Returned units 425 425 1,000 1,000 Required: 1. Calculate the activity rates for assigning costs to suppliers. Adverse buying rate $fill in the blank 1 per adverse purchase Supplier return rate $fill in the blank 2 per return 2. Calculate the total unit purchasing cost for each component for each supplier. If required, round your answers to the nearest cent. Total unit cost Jones Glass Claro Glass Side $fill in the blank 3 $fill in the blank 4 WS $fill in the blank 5 $fill in the blank 6

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter11: Strategic Cost Management

Section: Chapter Questions

Problem 11E: Assign the customer-related activity costs to each customer type using activity rates. Now calculate...

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Activity-Based Supplier Costing

Ventana Company is a car window repair and replacement company operating in the after-sales market. Ventana’s purchasing manager uses two suppliers (Jones Glass and Claro Glass) for the source of its passenger car windows. Data relating to side windows (Side) and windshields (WS) are given below.

I. Activity costs

Activity
Adverse buying*	696,000
Supplier returns**	79,800

* Extra cost of purchasing from local car dealer because of insufficient delivery of supplier.
** Windows returned because they were not ordered or because they were defective.

II. Supplier Data

	Jones Glass		Claro Glass
	Side	WS		Side	WS
Unit purchase price		$60			$145	$57	$142
Units purchased		15,000			15,000	30,000	30,000
Insufficient units		750			750	3,600	3,600
Returned units		425			425	1,000	1,000

Required:

1. Calculate the activity rates for assigning costs to suppliers.

Adverse buying rate	$fill in the blank 1	per adverse purchase
Supplier return rate	$fill in the blank 2	per return

2. Calculate the total unit purchasing cost for each component for each supplier. If required, round your answers to the nearest cent.

	Total unit cost

	Jones Glass	Claro Glass

Side	$fill in the blank 3	$fill in the blank 4
WS	$fill in the blank 5	$fill in the blank 6

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