Tigra Company Manufactures Engines II Supplier Data -Refer to the Figure

question 60

Multiple Choice

Tigra Company manufactures engines. Tigra produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Customer 1 and Customer 2. Both suppliers are reliable and rarely deliver late; however, Customer 1 sells the component for $10.00 per unit and Customer 2 sells the same component for $8.95. Hamilton purchases 70% of its components from Customer 2 because of the lower price. The total annual demand is 75,000 units.
I. Activity Data
$\begin{array}{ll}\text { Inspecting components (sampling only) } & \$ 190,000 \\\text { Reworking products (due to failed component) } & \$ 2,254,000 \\\text { Warranty work (due to failed component) } & \$ 1,723,000\end{array}$
II. Supplier Data
$\begin{array}{lrr}&\text { Customer } 1&\text { Customer } 2\\\text { Units Purchase Price } & \$ 10.00 & \$ 8.95 \\\text { Units Purchased } & 22,500 & 52,500 \\\text { Sampling Hours } & 50 & 2,450 \\\text { Rework Hours } & 135 & 3,625 \\\text { Warranty Hours } & 475 & 6,000\end{array}$
-Refer to the Figure.What is the activity rate for warranty work on the basis of warranty hours?

• A)$262 per hour
• B)$264 per hour
• C)$266 per hour
• D)$268 per hour

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Definitions:

Black-Scholes Model

A mathematical model used for pricing options, providing estimates of the variations over time of financial instruments.

European Put Options

A type of put option that can only be exercised at the expiration date, allowing the holder to sell the underlying asset at a specified strike price.

American Put Options

Financial instruments that give the holder the right to sell a specified amount of an underlying asset at a set price before the option expires.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase an asset or security at a predetermined price within a specific time frame.