Hamilton Company manufactures engines. Hamilton produces all the parts necessary

Question

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

A. Calculate the activity rate for inspecting components based on sampling hours.
B. Calculate the activity rate for reworking products based on rework hours.
C. Calculate the activity rate for warranty work based on warranty hours.

The answers are below I just need to understand the steps to getting the answers so please show your work

The answers to question A is $76 per-hour

The answer to Question B is $559 per-hour

The answer to Question C is $266 per-hour

Explanation / Answer

A. Calculate the activity rate for inspecting components based on sampling hours.

Activity                            Cost       Base      Rate
Inspecting components
(sampling only)              $190,000   2,500 $190,000/2500 = $76 per hour
                                                 (50+2450)

B. Calculate the activity rate for reworking products based on rework hours.
   
Activity                            Cost       Base      Rate
Reworking products(due
to failed component) $2,254,000 3,760 $2,254,000/3760 = $599 per hour
                                              (135+3625)
I think you have wrong answer or wrong base for reworking.

C. Calculate the activity rate for warranty work based on warranty hours.

Activity                          Cost       Base      Rate
Warranty work(due to
failed component)     $1,723,000 6,475 $1,723,000/3760 = $266 per hour
                                             (475+6000)

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