Figure 7-3

Multiple Choice

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 percent 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