Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The...
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Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The purchase contracts specify an average quality level of 86 percent. That is, 86 percent of the metal must be ready for use without further processing. Metal that is not ready can be treated at extra cost by RMF, and this is more cost-effective than scrapping the metal and purchasing additional amounts. The cost of treating the metal requiring further processing is $80 per ton. RMF uses two suppliers: Chopin Yards and Joe Company. During the past year, the purchasing quality data were as follows: Total purchases (tons) Average purchase price (per ton) Percentage requiring further processing Chopin Yards 2,300 $ 124.00 Joe Company Total 6.0 1,400 $128.00 9.5 3,700 $ 125.51 7.3 Required: Assume that the average quality, measured by the percentage of metal purchases requiring further processing, and prices from the two-companies will continue as in the past. What is the effective price for metal from the two companies when quality is considered? Note: Round your answers to 2 decimal places. Chopin Yards Joe Company Effective Cost per Ton Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The purchase contracts specify an average quality level of 86 percent. That is, 86 percent of the metal must be ready for use without further processing. Metal that is not ready can be treated at extra cost by RMF, and this is more cost-effective than scrapping the metal and purchasing additional amounts. The cost of treating the metal requiring further processing is $80 per ton. RMF uses two suppliers: Chopin Yards and Joe Company. During the past year, the purchasing quality data were as follows: Total purchases (tons) Average purchase price (per ton) Percentage requiring further processing Chopin Yards 2,300 $ 124.00 Joe Company Total 6.0 1,400 $128.00 9.5 3,700 $ 125.51 7.3 Required: Assume that the average quality, measured by the percentage of metal purchases requiring further processing, and prices from the two-companies will continue as in the past. What is the effective price for metal from the two companies when quality is considered? Note: Round your answers to 2 decimal places. Chopin Yards Joe Company Effective Cost per Ton
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Given data Chopin Yards Total purchases 2300 tons Average purchase price per ton 12400 Percentage re... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Posted Date:
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