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Required information [The following information applies to the questions displayed below.] Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The purchase contracts specify an average quality level of 90 percent. That is, 90 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 Joe Company Chopin Yards 1,500 $ 124.00 2.0 Effective Cost per Ton Joe Company 1,000 $ 120.00 7.5 Total 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. 2,500 $ 122.40 4.2

Required information [The following information applies to the questions displayed below.] Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The purchase contracts specify an average quality level of 90 percent. That is, 90 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 Joe Company Chopin Yards 1,500 $ 124.00 2.0 Effective Cost per Ton Joe Company 1,000 $ 120.00 7.5 Total 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. 2,500 $ 122.40 4.2

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter11: Strategic Cost Management
Section: Chapter Questions
Problem 4CE: Kagle design engineers are in the process of developing a new green product, one that will...
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! Required information [The following information applies to the questions displayed below.] Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The purchase contracts specify an average quality level of 90 percent. That is, 90 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 Joe Company Chopin Yards 1,500 $ 124.00 2.0 Effective Cost per Ton Joe Company 1,000 $ 120.00 7.5 Total 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. 2,500 $ 122.40 4.2
Transcribed Image Text:! Required information [The following information applies to the questions displayed below.] Rex Metal Fabricators (RMF) buys scrap metal and produces components for buildings and other structures. The purchase contracts specify an average quality level of 90 percent. That is, 90 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 Joe Company Chopin Yards 1,500 $ 124.00 2.0 Effective Cost per Ton Joe Company 1,000 $ 120.00 7.5 Total 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. 2,500 $ 122.40 4.2
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