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liraira [26]
2 years ago
15

A coffee company wants a new flavor of Cajun coffee. How many pounds of coffee worth $ 8$8 a pound should be added to 2020 pound

s of coffee worth $ 5$5 a pound to get a mixture worth $ 6$6 a​ pound?
Business
1 answer:
Gnoma [55]2 years ago
7 0

Incomplete question:

A coffee company wants a new flavor of Cajun coffee. How many pounds of coffee worth $8 a pound should be added to 20 pounds of coffee worth $5 a pound to get a mixture worth $6 a pound?

Answer:

a = 10 pounds

Explanation:

Let , a = pounds of  $8 coffee per pound needed

$8a = cost of the $8 coffee/pound  used

20 × 5 = cost of $5/pounds coffee for 20 pounds

$100 =  cost of $5/pound coffee for 20 pounds

Rate = cost of coffee needed/ amount of pounds needed

(8a + 100)/( a + 20) = 6

cross multiply

8a + 100 = 6(a + 20)

8a + 100 = 6a + 120

8a - 6a = 120 - 100

2a = 20

divide both sides by 2

a = 20/2

a = 10 pounds

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Relevant Information:

The relevant information is as under:

Segmented income statements appear as follows:

Product                                    Original  Strawberry  Orange

Sales                                     65,200   85,600          102,400

Variable costs                     (44,000)   (77,200)  (80,200)

Contribution margin              21,200     8,400    22,200

Fixed costs allocated                (9,400)    (12,000)   (14,200)

Operating profit (loss)       11,800      (3,600)      8,000  

Answer:

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Explanation:

Relevant costing says that any savings or losses are relevant if it satisfy following three conditions:

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Its crystal clear that any inflows and outflows that are considered would be cash in nature, not related to past events it must be arising as a consequence of taking the decision whose consequences are we considering now, I mean it must arise in future due to the decision made which are considering. The last condition is the concept of differential that lies in the heart of relevant costing and is easily understood by following the following steps:

Step 1: What are the losses or savings if we don't make decision?

Step 2: What are the losses or savings if we make the decision?

Step 3: The difference between step one and two is differential or incremental cost.

Here we learned that relevant cost arises if we take the decision (closing manufacturing of Strawberry), and it doesn't arises if we don't take the decision (not abandoning manufacturing of  Strawberry).

Relevant costs associated with the decision are as under:

                                                    Step 1              Step 2        Step 3

                                            Make Decision    If we Don't Differential

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Variable Costs Savings              77,200                 -            77,200

Fixed costs Savings (W1)             5340                   -              5340

Operating Profit                                                                   (3,060)

Working1: Fixed costs Savings

Total Fixed costs =21400+12000+14200 = $35,600

The saving is 15% of the total fixed cost and is as under:

Fixed costs Savings = $35,600 * 15% = $5340

Note:

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