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Required information Exercise 10-36 & 10-37 (Algo) (LO 10-3, 4) [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 89 percent. That is, 89 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 Exercise 10-37 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Chopin Yards 1,700 $ 124.00 3.0 Indifference point % Joe Company 1,100 $ 122.00 8.0 Total Required: Assume all else remains the same. What percentage of metal from Chopin Yards that requires further processing would make Rex Metal Fabricators indifferent between buying from Chopin Yards and Joe Company? Note: Enter your answer as a percentage rounded to 1 decimal place (i.e., .321 as 32.1). 2,800 $123.21 5.0

Required information Exercise 10-36 & 10-37 (Algo) (LO 10-3, 4) [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 89 percent. That is, 89 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 Exercise 10-37 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Chopin Yards 1,700 $ 124.00 3.0 Indifference point % Joe Company 1,100 $ 122.00 8.0 Total Required: Assume all else remains the same. What percentage of metal from Chopin Yards that requires further processing would make Rex Metal Fabricators indifferent between buying from Chopin Yards and Joe Company? Note: Enter your answer as a percentage rounded to 1 decimal place (i.e., .321 as 32.1). 2,800 $123.21 5.0

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
Chapter14: Quality And Environmental Cost Management
Section: Chapter Questions
Problem 5CE: Verde Company reported operating costs of 50,000,000 as of December 31, 20x5, with the following...
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Required information Exercise 10-36 & 10-37 (Algo) (LO 10-3, 4) [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 89 percent. That is, 89 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 Exercise 10-37 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Chopin Yards 1,700 $ 124.00 3.0 Indifference point % Joe Company 1,100 $ 122.00 8.0 Total Required: Assume all else remains the same. What percentage of metal from Chopin Yards that requires further processing would make Rex Metal Fabricators indifferent between buying from Chopin Yards and Joe Company? Note: Enter your answer as a percentage rounded to 1 decimal place (i.e., .321 as 32.1). 2,800 $ 123.21 5.0
Transcribed Image Text:Required information Exercise 10-36 & 10-37 (Algo) (LO 10-3, 4) [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 89 percent. That is, 89 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 Exercise 10-37 (Algo) Activity-Based Costing of Suppliers (LO 10-3, 4) Chopin Yards 1,700 $ 124.00 3.0 Indifference point % Joe Company 1,100 $ 122.00 8.0 Total Required: Assume all else remains the same. What percentage of metal from Chopin Yards that requires further processing would make Rex Metal Fabricators indifferent between buying from Chopin Yards and Joe Company? Note: Enter your answer as a percentage rounded to 1 decimal place (i.e., .321 as 32.1). 2,800 $ 123.21 5.0
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