Activity-Based Supplier Costing
Levy Inc. manufactures tractors for agricultural usage. Levy purchases the engines needed for its tractors from two sources: Johnson Engines and Watson Company. The Johnson engine has a price of $1,000. The Watson engine is $900 per unit. Levy produces and sells 22,000 tractors. Of the 22,000 engines needed for the tractors, 4,000 are purchased from Johnson Engines, and 18,000 are purchased from Watson Company. The production manager, Jamie Murray, prefers the Johnson engine. However, Jan Booth, purchasing manager, maintains that the price difference is too great to buy more than the 4,000 units currently purchased. Booth also wants to maintain a significant connection with the Johnson source just in case the less expensive source cannot supply the needed quantities. Jamie, however, is convinced that the quality of the Johnson engine is worth the price difference.
Frank Wallace, the controller, has decided to use activity costing to resolve the issue. The following activity cost and supplier data have been collected:
Required:
Accounting Information Systems
Financial And Managerial Accounting
College Accounting, Chapters 1-27
Intermediate Accounting: Reporting And Analysis
Financial Accounting
Corporate Financial Accounting
Financial & Managerial Accounting
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Essentials of Economics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Foundations of Business (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Principles of Economics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Contemporary Marketing
Brief Principles of Macroeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Management, Loose-Leaf Version
MKTG 12:STUDENT ED.-TEXT
Accounting Information Systems
Accounting (Text Only)
Financial Accounting
College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
Financial & Managerial Accounting
Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Statistics for Business & Economics, Revised (MindTap Course List)
Exploring Economics
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Principles of Macroeconomics (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Survey of Accounting (Accounting I)
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Corporate Financial Accounting
Cornerstones of Cost Management (Cornerstones Series)
Practical Management Science
Purchasing and Supply Chain Management
Economics For Today
Economics (MindTap Course List)
Microeconomics
Managerial Accounting
Cornerstones of Financial Accounting
Understanding Management (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
Principles of Microeconomics
Micro Economics For Today
Macroeconomics: Private and Public Choice (MindTap Course List)
MACROECONOMICS FOR TODAY
Economics: Private and Public Choice (MindTap Course List)