Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

Exercise 32

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 on the next page.
I. Activity Costs

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.
3. What if the quantity of side windows that can be purchased is limited to 15,000 units from Jones and 45,000 units from Claro? There is no limit from either source for windshields. Based on cost, what purchasing mix should be chosen? What problem does this create? What else might you suggest if you were the manager of Ventana?