(SOLVED) Jacaranda Builders is undertaking an analysis of supplier costs in


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$20

Jacaranda Builders is undertaking an analysis of supplier costs in order to evaluate the relative costs and performance of each supplier. They have isolated a range of activities that are consumed by suppliers, identified activity drivers, and estimated the cost per unit of activity driver for last year:
The three major suppliers to the Company consumed the following numbers of activities:
In addition, a supplier relationship manager (salary $90 000) was employed. It is estimated that 60 percent of his time was spent serving Wombat Plumbing, and 40 percent for the other two suppliers. The cost of material purchased from each supplier was as follows:
Possum Timber ………………………… $240 000
Wombat Plumbing …………………….. $300 000
Emu Insulation ……………………….. $148 000
Required:
1. Calculate the total cost of ownership for each of the three suppliers, using a format similar to that shown in Exhibit 15.3.
2. Determine the supplier performance index for each supplier.
3. Discuss the relative performance of each supplier.
4. Do you have any recommendations on supplier selection for the management of Jacaranda Builders?

Answer

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