Figure 7-3.Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.
-Refer to Figure 7-3. Calculate the total activity cost per component associated with using Traynor Inc., as the supplier.
A) $15.75
B) $10.00
C) $19.38
D) $20.00
E) $22.80

Question

Figure 7-3.Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.  
-Refer to Figure 7-3. Calculate the total activity cost per component associated with using Traynor Inc., as the supplier.
A) $15.75 
B) $10.00 
C) $19.38 
D) $20.00 
E) $22.80

Quizplus · Accepted Answer

The total activity cost per component is calculated by summing up all the relevant costs associated with using Traynor Inc. as the supplier. The correct calculation leads to a total of $19.38 per component.