Activity Cost II Supplier Data -Refer to Tigra Company

question 93

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. What is the total cost per component associated with using Supplier 2?

• A) $8.95
• B) $12.00
• C) $15.74
• D) $84.26

---

Definitions:

Dummy Variables

Variables created to include categorical data in regression models, converting categories to a numerical form.

Confidence Intervals

Ranges within which a population parameter is estimated to lie with a certain level of confidence, often used to indicate the reliability of an estimate.

Regression Coefficients

Parameters in a regression model that quantify the relationship between the dependent variable and each of the independent variables.

Sampling Error

The discrepancy between the statistical characteristics of a sample and those of the entire population, arising purely from the randomness of the sample selection.