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Standard Company has two suppliers: Day and Larsen. The cost of warranty work due to defective components is $3,000,000. The total units repaired under warranty average 150,000, of which 135,000 have components from Day and 15,000 have components from Larsen. Select the item below that represents a true statement. a. Components purchased from Larsen cost $300,000 more than their purchase price. b. Components purchased from Larsen cost $2,700,000 more than their purchase price. c. Components from Larsen appear to be of lower quality. d. Components from Day cost $300,000 less than their purchase price.

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
BuyFind

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Solutions

Chapter
Section
Chapter 11, Problem 22E
Textbook Problem

Standard Company has two suppliers: Day and Larsen. The cost of warranty work due to defective components is $3,000,000. The total units repaired under warranty average 150,000, of which 135,000 have components from Day and 15,000 have components from Larsen. Select the item below that represents a true statement.

  1. a. Components purchased from Larsen cost $300,000 more than their purchase price.
  2. b. Components purchased from Larsen cost $2,700,000 more than their purchase price.
  3. c. Components from Larsen appear to be of lower quality.
  4. d. Components from Day cost $300,000 less than their purchase price.

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Chapter 11 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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