A 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. (Round your answers to the nearest integer.) Cost per Pound ($) Quantity (pounds) Ingredient Beginning Ending per 100 Pounds of Product A 2.50 2.95 25 B 8.75 9.90 15 0.99 0.90 50 (a) Compute the price relatives for the three ingredients. Item Price Relative (b) Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product. What is your interpretation of this index value? Cost of raw materials is up % for the chemical.

A 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. (Round your answers to the nearest integer.) Cost per Pound ($) Quantity (pounds) Ingredient Beginning Ending per 100 Pounds of Product A 2.50 2.95 25 B 8.75 9.90 15 0.99 0.90 50 (a) Compute the price relatives for the three ingredients. Item Price Relative (b) Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product. What is your interpretation of this index value? Cost of raw materials is up % for the chemical.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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