Question

Wayne Casting, Inc., produces a product made form a metal alloy. Wayne buys the alloy from two different suppliers, Chillicothe Metals and Ames Supply, in approximately equal amounts because of the supply constraints at both vendors. The material from Chillicothe is less expensive to buy, but more difficult to use, resulting in greater waste. The metal ally is highly toxic and any waste requires costly handling to avoid environmental accidents. Last year the cost of handling the waste totaled $290,000. Additional data from last year's operations are shown below

	Chillicothe Metals	Ames Supply
Amount of material purchased (tons)	173	127
Amount of waste (tons)	12.90	2.70
Cost of material purchased	$688,000	$912,000

Required:

a.Allocate the cost of wast handling to the wast handling to the two suppliers based on :(do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

	Chillicothe Metals	Ames Supply
1.Amount of material purchased
2.Amount of waste
3.Cost of material purchased	$124,700	$165,300

Answer 1

	Chillicote Metals	Ames Supply
Amount of material purchased	$              1,67,233	$      1,22,767
Amount of waste	$              2,39,808	$          50,192
Cost of material purchased	$              1,24,700	$      1,65,300
Workings:
	Chillicote Metals	Ames Supply	Total
Material purchased (tons)	173	127	300
Percentage	58%	42%	100%
Allocated waste handling cost ($290000)	$              1,67,233	$      1,22,767	$   2,90,000
	Chillicote Metals	Ames Supply	Total
Amount of waste (tons)	12.9	2.7	15.6
Percentage	83%	17%	100%
Allocated waste handling cost ($290000)	$              2,39,808	$          50,192	$   2,90,000
	Chillicote Metals	Ames Supply	Total
Material purchased (Total)	$              6,88,000	$      9,12,000	$ 16,00,000
Percentage	43%	57%	100%
Allocated waste handling cost ($290000)	$              1,24,700	$      1,65,300	$   2,90,000