Question 25 Hamilton Company manufactures engines. Hamilton produces all the par

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Question 25 Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor, Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70 percent of its components from Bello, because of the lower price. The total annual demand is 75,000 units. I. Activity Data Activity Cost Inspecting components (sampling only) $190,000 Reworking products (due to failed component) $2,254,000 Warranty work (due to failed component) $1,723,000 II. Supplier Data Traynor, Inc. Bello Company Units Purchase Price $10.00 $8.95 Units Purchased 22,500 52,500 Sampling Hours 50 2,450 Rework hours 135 3,625 Warranty hours 475 6,000 Calculate the activity rate for reworking products based on rework hours. Answer $599 per hour $595 per hour $602 per hour $605 per hour $622 per hour

Explanation / Answer

$605 per hour

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