The following information applies to the questions displayed

The following information applies to the questions displayed below.] JFI Foods produces processed foods. Its basic ingredient is a feedstock that is mixed with other ingredients to produce the final packaged product. JFI purchases the feedstock from two suppliers, Rex Materials and Red Oak Chemicals. The quality of the final product depends directly on the quality of the feedstock. If the feedstock is not correct, JFI has to dispose of the entire batch. All feedstock in this business is occasionally \"bad,\" so JFI measures what it calls the \"yield,\" which is measured as, Yield Good output Input where the output and inputs are both measured in tons. As a benchmark, JFI expects to get 27 tons of good output for every 30 tons of feedstock purchased for a yield of 90 percent 27 tons of output 30 tons of feedstock) Data on the two suppliers for the past year follow: Red Oak Chemicals Rex Materials 1540 1448 Total 3,980 3,186 Total inputs purchased (tons) Good output (tons) Average price (per ton) 2.440 1738 S 275 $ 235 250 Required information Required Assume that the average quality, measured by the yield, and prices from the two companies will continue as in the past. What is the effective price for feedstock from the two companies when quality is considered? (Round intermediate calculations and final answers to 2 decimal places.) Rex Materials Red Oak Chemicals Effective price per tor

Solution

Answer:-

Average quality, measure by yield

27 tons of good output for every 30 tones of purchase

so in percentage it turns out to be 27/30 = 90.00%

Assuming such average quality yield on purchase of FEEDSTOCK from

both the suppliers.

Calculation of Effective Price per Ton:-

Rounded off to 2 Decimal places

Alternatively, according to last year data if actual value of good output is considered  

Effective price per ton would be,

Particulars	REX	RED OAK
Average Price Quoted (A)	$275	$235
Average Quality Yield (Given) (B)	90.00%	90.00%
Effective Price (A)/(B)	275/90%	235/90%
Effective Price  (A)/(B) Answer	305.55	261.11