Activity Cost II Supplier Data -Refer to Tigra Company

question 65

Multiple Choice

Activity Cost $$\begin{array} { l l } \text { Inspecting comp onents (sampling only) } & \$ 190,000 \\\text { Reworking products (due to failed component) } & \$ 2,254,000 \\\text { Warranty work (due to failed component) } & \$ 1,723,000\end{array}$$ II. Supplier Data $\begin{array}{lrr}&\text { Supplier } 1 &\text { Supplier } 2\\\text { Units Purchase Price } & \$ 10.00 & \$ 8.95 \\\text { Units Purchased } & 22,500 & 52,500 \\\text { Sampling Hours } & 50 & 2,450 \\\text { Rework Hours } & 135 & 3,625 \\\text { Warranty Hours } & 475 & 6,000\end{array}$
-Refer to Tigra Company. Suppose that the company loses $2,500,000 in sales per year because of its reputation for defective units attributable to failed components. Using warranty hours, assign the proportional cost of lost sales to Supplier 1. What would be the additional cost per unit as a result of the lost sales?

• A) $4.00 per unit
• B) $8.15 per unit
• C) $8.95 per unit
• D) $25.00 per unit

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