Required Information Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4) [The following information applies to the questions displayed below.] Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon Total 8,000 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. The Accounting Department recorded $273,000 as the cost of late deliveries to customers. Hessel 3,000 $ 216 20 15% 5,000 $ 200 40 30% Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. Also assume that the number of components is the same for all deliveries from either company. Indifference point $ 206 60 25% Required: What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio and Video? 96 Note: Do not round Intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (l.e., .3212 as 32.12).
Required Information Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4) [The following information applies to the questions displayed below.] Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for WES to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following: Bacon Total 8,000 Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of cartons delivered late. The Accounting Department recorded $273,000 as the cost of late deliveries to customers. Hessel 3,000 $ 216 20 15% 5,000 $ 200 40 30% Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. Also assume that the number of components is the same for all deliveries from either company. Indifference point $ 206 60 25% Required: What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio and Video? 96 Note: Do not round Intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (l.e., .3212 as 32.12).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required Information
Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4)
[The following information applies to the questions displayed below.]
Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from
two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are
delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for
WES to reimburse a portion of the purchase price to the customer.
During the past quarter, the purchasing and delivery data for the two suppliers showed the following:
Bacon
5,000
Total purchases (cartons)
Average purchase price (per carton)
Number of deliveries
Percentage of cartons delivered late.
The Accounting Department recorded $273,000 as the cost of late deliveries to customers.
Indifference point
Hessel
3,000
$ 216
20
15%
$ 200
40
30%
96
Total
8,000
$ 206
Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4)
Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in
the past. Also assume that the number of components is the same for all deliveries from either company.
60
25%
Required:
What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio
an Vide
Note: Do not round Intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (l.e., .3212 as
32.12).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F29a6cc4b-ac67-49e8-91c6-8d8e67d1350e%2F79ed1d38-2a65-4dc9-a404-506bf02a5b21%2Fsowj3pd_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
Exercise 10-38 & 10-39 (Algo) (LO 10-3, 4)
[The following information applies to the questions displayed below.]
Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from
two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are
delivered late, the installation for the customer is delayed. Delayed installations lead to contractual penalties that call for
WES to reimburse a portion of the purchase price to the customer.
During the past quarter, the purchasing and delivery data for the two suppliers showed the following:
Bacon
5,000
Total purchases (cartons)
Average purchase price (per carton)
Number of deliveries
Percentage of cartons delivered late.
The Accounting Department recorded $273,000 as the cost of late deliveries to customers.
Indifference point
Hessel
3,000
$ 216
20
15%
$ 200
40
30%
96
Total
8,000
$ 206
Exercise 10-39 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4)
Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in
the past. Also assume that the number of components is the same for all deliveries from either company.
60
25%
Required:
What percentage of late deliveries by Bacon would make WES indifferent between buying from Bacon Electronics and Hessel Audio
an Vide
Note: Do not round Intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (l.e., .3212 as
32.12).
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