Cornerstone Exercise 11.2 (Algorithmic) Activity-Based Supplier Costing Ventana
ID: 2513513 • Letter: C
Question
Cornerstone Exercise 11.2 (Algorithmic)
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
* 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
Required:
1. Calculate the activity rates for assigning costs to suppliers.
2. Calculate the total unit purchasing cost for each component for each supplier. If required, round your answers to the nearest cent.
Activity Adverse buying* 652,500 Supplier returns** 64,900Explanation / Answer
1) Activity costs Adverse buying 652500/(1050+1050+3300+3300) 75 per adverse purchase Supplier return rate 64,900/(475+475+1000+1000) 22 per return 2) Jones Glass Claro glass side WS Side WS Adverse purchases 75*1050 78750 75*1050 78750 75*3300 247500 75*3300 247500 Returns 22*475 10450 22*475 10450 22*1000 22000 22*1000 22000 total cost 89200 89200 269500 269500 units 20,000 20,000 40,000 40,000 units produced 4.46 4.46 6.74 6.74 unit purchase cost 80.00 145.00 77.00 142.00 total unit cost 84.46 149.46 83.74 148.74 jone Claro glass Glass side 84.46 83.74 WS 149.46 148.74