The Mitchell Chemical Company produces a special industrial chemical that is a blend of three chemical ingredients. The beginning-year cost per pound, the ending-year cost per pound, and the blend proportions follow. Cost per Pound ($) Ingredient Beginning Ending Quantity (pounds) per 100 Pounds of Product A 2.50 3.85 25 B 8.75 10.15 15 0.99 0.95 60 a. Compute the price relatives for the three ingredients (to the nearest whole number). Ingredient A Ingredient B Ingredient C b. Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product (to the nearest whole number). From this index, we conclude that the cost of the ingredients increased % over the one-year period.

The Mitchell Chemical Company produces a special industrial chemical that is a blend of three chemical ingredients. The beginning-year cost per pound, the ending-year cost per pound, and the blend proportions follow. Cost per Pound ($) Ingredient Beginning Ending Quantity (pounds) per 100 Pounds of Product A 2.50 3.85 25 B 8.75 10.15 15 0.99 0.95 60 a. Compute the price relatives for the three ingredients (to the nearest whole number). Ingredient A Ingredient B Ingredient C b. Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product (to the nearest whole number). From this index, we conclude that the cost of the ingredients increased % over the one-year period.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 22E: Total cost method of product pricing Based on the data presented in Exercise 17, assume that Smart...

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