Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

JFI Foods produces processed foods. Its basic ingredient is a feedstock that is mixed with other ingredients to produce the final packaged product. JFI purchases

JFI Foods produces processed foods. Its basic ingredient is a feedstock that is mixed with other ingredients to produce the final packaged product. JFI purchases the feedstock from two suppliers, Rex Materials and Red Oak Chemicals. The quality of the final product depends directly on the quality of the feedstock. If the feedstock is not correct, JFI has to dispose of the entire batch. All feedstock in this business is occasionally "bad," so JFI measures what it calls the "yield," which is measured as,

Yield = Good output Input

where the output and inputs are both measured in tons. As a benchmark, JFI expects to get 28 tons of good output for every 35 tons of feedstock purchased for a yield of 80 percent (= 28 tons of output 35 tons of feedstock).

Data on the two suppliers for the past year follow:

Rex Materials Red Oak Chemicals Total
Total inputs purchased (tons) 1,550 2,450 4,000
Good output (tons) 1,473 1,748 3,221
Average price (per ton) $ 280 $ 240 $ 256

Required:

Assume that the average quality, measured by the yield, and prices from the two companies will continue as in the past. What is the effective price for feedstock from the two companies when quality is considered? (Round intermediate calculations and final answers to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting And Business Ethics An Introduction

Authors: Ken McPhail, Diane Walters

1st Edition

0674018788, 9780415362368

More Books

Students also viewed these Accounting questions

Question

Why must in-service training or on-the-job education be continuing?

Answered: 1 week ago