Roscoe Construction Company (RCC) is a company specializing in building roads and highways. As a part of its business, it receives supplies of aggregate from two suppliers: Toorak Gravel (TG) and Kilda Corporation (KC). RCC purchasing has expressed a preference for KC based on price, but occasionally has to order from TG when KC cannot fill the order. RCC has recently had problems with the quality and the timeliness of deliveries. When a supplier delivers a load to RCC, it goes through an initial inspection to assure it meets specification. If the load fails the initial inspection, it goes through a secondary inspection to determine the exact issue. Almost always, the issue can be resolved and the load can be used. The initial inspection costs $2,408 per load. A secondary inspection, which is more thorough, costs $6,200 per load. If a delivery is delayed, RCC has to hire temporary workers or pay overtime to some employees. The average cost of a delayed load is $3,200. The following are summary statistics from last year's purchases from the two suppliers. Number of loads Average tons per load Average price per ton Number of initial inspections passed Number of delayed deliveries Toorak Gravel 100 10,000 $ 6.00 94 10 Kilda Corp. 400 5,000 $ 5.90 300 80 Required: Calculate the effective cost of a ton of aggregate from the two suppliers, assuming that last year's experience is representative. (Round "Average price paid per ton" & "Average effective price per ton" answers to 2 decimal places.) 1 Number of loads Average tons per load Average price per ton Number of initial inspections passed Number of delayed deliveries Toorak Gravel 100 10,000 $ 6.00 94 10 Kilda Corp. 400 5,000 $ 5.90 300 80 25 points Required: Calculate the effective cost of a ton of aggregate from the two suppliers, assumi experience is representative. (Round "Average price paid per ton" & "Average ton" answers to 2 decimal places.) Answer is complete but not entirely correct. Item Toorak Kilda Gravel Corporation Loads purchased 100 400 Average tons per load 10,000 5,000 Total tons purchased 1,000,000 2,000,000 Loads passing initial inspection 6 6 Loads delayed 6,000,000 11,800,000 $ Average price paid per ton 240,800.00 $ 963,200.00 Total purchase price $ 37,200 $ 620,000 Initial inspection costs $ 32,000 $ 256,000 Secondary inspection costs $ 6,310,000 $ 13,639,200 Delay costs $ 1,000,000 $ 2,000,000 Total costs $ 7,379,200 $ 16,515,200 Average effective price per ton 6.31 $ 6.82 $
