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(a) Compute the price relatives for the three ingredients. Item Price Relative A B с (b) Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product. I = What is your interpretation of this index value? Cost of raw materials is up % for the chemical. 03

(a) Compute the price relatives for the three ingredients. Item Price Relative A B с (b) Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product. I = What is your interpretation of this index value? Cost of raw materials is up % for the chemical. 03

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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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 ($) Quantity (pounds) Ingredient Beginning Ending per 100 Pounds of Product A 1.50 3.45 25 B 8.75 9.90 15 с 0.99 0.90 70 (a) Compute the price relatives for the three ingredients. Item Price Relative A B C (b) Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product. I = What is your interpretation of this index value? Cost of raw materials is up % for the chemical.
Transcribed Image Text:A chemical company produces a special industrial chemical that is a blend of three chemical ingredients. The beginning-year cost per pound, the ending-year cost per pound, and the blend proportions follow. (Round your answers to the nearest integer.) Cost per Pound ($) Quantity (pounds) Ingredient Beginning Ending per 100 Pounds of Product A 1.50 3.45 25 B 8.75 9.90 15 с 0.99 0.90 70 (a) Compute the price relatives for the three ingredients. Item Price Relative A B C (b) Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product. I = What is your interpretation of this index value? Cost of raw materials is up % for the chemical.
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