Answer:
The item price relative of ingredients A, B and C is 118, 113 and 91
Explanation:
Given
-----------------Cost per Pound ($)
Ingredient ---- Beginning ------ Ending Quantity (pounds) per 100 Pounds of Product
A ---------------- 2.50 ------ 2.95 ------ 25
B ---------------- 8.75 ------ 9.90 ------- 10
C ----------------- 0.99 ----- 0.90 ----- 60
Required
Calculate the price relatives for all ingredients
The price relatives for each ingredient is calculated using the following formula.
Price Relative = (P' * Q)/P°
Where
P' = Ending Cost per pound
P° = Beginning Cost per pound
Q = Quantity
The quantity is uniform for all products because it's measured per 100 pounds of each product.
So, Q = 100
Calculating Price Relative of A
P' of Ingredient A = 2.95
P° of Ingredient A = 2.50
By Substituting the right values in the given formula
P = (2.95 * 100)/2.50
P = 295/2.50
P = 118
Calculating Price Relative of B
P' of Ingredient B = 9.90
P° of Ingredient B = 8.75
By Substituting the right values in the given formula
P = (9.90 * 100)/8.75
P = 990/8.75
P = 113.1429
P = 113 ( Approximated)
Calculating Price Relative of C
P' of Ingredient C = 0.9
P° of Ingredient C = 0.99
By Substituting the right values in the given formula
P = (0.9 * 100)/0.99
P = 90/0.99
P = 90.90909
P = 91 (Approximated).
Hence, the item price relative of ingredients A, B and C is 118, 113 and 91
