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Figure 7-3. 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% 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 Bello Inc. Company Unit 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

14. Refer to Figure 7-3. Calculate the activity rate for inspecting components based on sampling hours. a. $78 per hour b. $72 per hour c. $77.25 per hour d. $80 per hour e. $76 per hour

15. Refer to Figure 7-3. Calculate the activity rate for reworking products based on rework hours. Round to the nearest whole dollar. a. $599 per hour b. $595 per hour c. $602 per hour d. $605 per hour e. $622 per hour

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