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 *Extra cost of purchasing from local car dealer because of insufficient delivery of supplier. **Windows returned because they were not ordered or because they were defective. 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?

BuyFind

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 2CE
Textbook Problem

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.

  1. I. Activity Costs

Chapter 11, Problem 2CE, Ventana Company is a car window repair and replacement company operating in the after-sales market. , example  1

*Extra cost of purchasing from local car dealer because of insufficient delivery of supplier.

**Windows returned because they were not ordered or because they were defective.

  1. II. Supplier Data

Chapter 11, Problem 2CE, Ventana Company is a car window repair and replacement company operating in the after-sales market. , example  2

Required:

  1. 1. Calculate the activity rates for assigning costs to suppliers.
  2. 2. Calculate the total unit purchasing cost for each component for each supplier.
  3. 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?

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Chapter 11 Solutions

Cornerstones of Cost Management (Cornerstones Series)
Ch. 11 - What are the four stages of the consumption life...Ch. 11 - Life-cycle cost reduction is best achieved during...Ch. 11 - What is target costing? What role does it have in...Ch. 11 - Explain why JIT with dedicated cellular...Ch. 11 - Explain how backflush costing works.Ch. 11 - Woodruff Company is currently producing a...Ch. 11 - Ventana Company is a car window repair and...Ch. 11 - Deeds Company sells custom-made machine parts to...Ch. 11 - Kagle design engineers are in the process of...Ch. 11 - Hepworth Company has implemented a JIT system and...Ch. 11 - Keith Golding has decided to purchase a personal...Ch. 11 - San Jose Goodwill Bank has been experiencing...Ch. 11 - Classify the following cost drivers as structural,...Ch. 11 - McConkie Company has decided to pursue a cost...Ch. 11 - Jackson, Inc., manufactures motorcycles. Jackson...Ch. 11 - Assign the customer-related activity costs to each...Ch. 11 - The following series of statements or phrases are...Ch. 11 - Assume that a company has recently switched to JIT...Ch. 11 - Prior to installing a JIT system, Barker Company,...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Bunker Company produces two types of glucose...Ch. 11 - Which of the following is a true statement about...Ch. 11 - Which of the following is a true statement about...Ch. 11 - This year, Hassell Company will ship 4,000,000...Ch. 11 - Standard Company has two suppliers: Day and...Ch. 11 - The second stage of customer-based activity-based...Ch. 11 - Evans, Inc., has a unit-based costing system....Ch. 11 - Cortalo, Inc., manufactures riding lawn mowers....Ch. 11 - Moss Manufacturing produces several types of...Ch. 11 - Maxwell Company produces a variety of kitchen...Ch. 11 - Pawnee Works makes machine parts for manufacturers...Ch. 11 - Nico Parts, Inc., produces electronic products...Ch. 11 - Jolene Askew, manager of Feagan Company, has...Ch. 11 - Homer Manufacturing produces different models of...Ch. 11 - Mott Company recently implemented a JIT...Ch. 11 - Southward Company has implemented a JIT flexible...Ch. 11 - Reddy Heaters, Inc., produces insert heaters that...

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