Final answer:
Based on the warranty repair costs provided, components from Leming have a higher per unit warranty repair cost, but without the purchase prices, we can't confirm if they cost more overall than their purchase price. Components from Deming show a lower per unit warranty cost despite making up the majority of repairs. Components from Leming are not necessarily of higher quality as the data suggests higher warranty costs per unit.
Step-by-step explanation:
The question provided asks us to analyze the warranty cost implications for the components sourced from two suppliers, Deming and Leming, based on the given data: total warranty work costs of $2,000,000 and 100,000 units repaired under warranty, with the division being 90,000 from Deming and 10,000 from Leming. To assess the cost impact of warranty repairs related to each supplier, we examine how this cost is distributed between the defective components of each supplier.
Cost per unit for Deming: There are 90,000 defective units from Deming, and the total warranty cost is $2,000,000. The cost per unit for warranty work on Deming components is $2,000,000 / 90,000 units = $22.22 per unit. Since Deming accounts for the majority of defects, most of the $2 million warranty work cost would be associated with Deming components. If we say that purchasing these components cost $0, then the warranty repairs cost $22.22 more than their purchase price per unit, totaling $1,800,000 more for all Deming components ($22.22/unit x 90,000 units).
Cost per unit for Leming: There are 10,000 defective units from Leming, which means the cost per unit for warranty work on Leming components is $2,000,000 / 10,000 units = $200 per unit. This suggests that, relative to their number, components from Leming are associated with a higher per unit warranty repair cost than those from Deming. If we say that purchasing these Leming components also cost $0, then these warranty repairs cost $200 more than their purchase price per unit. However, given that we only have total costs and quantities for each supplier, we cannot determine without further information if the components from Leming actually cost more than their purchase price. Based solely on the data provided, statement 1 is true in that the per unit warranty cost for Leming's components is higher, but we cannot confirm the total amount without knowing the original purchase price.
The statement that components from Leming appear to be of higher quality is not supported by the information given, because higher warranty costs per unit could be indicative of higher costs to repair, which does not necessarily correlate with higher quality; it may rather imply lower quality if the components are failing more frequently or are more expensive to repair. Therefore, we can conclude that statement 3 is not necessarily true based on the data provided.
Given this analysis, we can state that not all of the statements are true, making statement 4 incorrect.