! 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 86 percent. That is, 86 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 Required: Chopin Yards 2,300 Joe Company 1,400 Total 3,700 $ 124.00 $ 128.00 6.0 9.5 $ 125.51 7.3 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). Indifference point %

! 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 86 percent. That is, 86 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 Required: Chopin Yards 2,300 Joe Company 1,400 Total 3,700 $ 124.00 $ 128.00 6.0 9.5 $ 125.51 7.3 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). Indifference point %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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