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The Mitchell Chemical Company produces a special industrial chemical that is a blend ofthree chemical ingredients....

The Mitchell Chemical Company produces a special industrial chemical that is a blend ofthree chemical ingredients. The beginning-year cost per pound, the ending-year cost perpound, and the blend proportions follow.

Cost per Pound ($)

Ingredient Beginning Ending Quanity per 100 pounds

A 2.50 3.95 25

B 8.75 9.90 15

C .99 .95 60

a) Compute the price relatives for the three ingredients.

b. Compute a weighted average of the price relatives to develop a one-year cost indexfor raw materials used in the product. What is your interpretation of this index value?

Math   Statistics-And-Probability   
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