Question

The Bitz-Karan Corporation faces a blending decision in developing a new cat food called Yum-Mix. Two basic ingredients have been combined and tested, and the firm has determined that to each can of Yum-Mix, it must add at least 30% of ingredient X and at least 20% of ingredient Y. The costs per can for X and Y are $4 and $2, respectively. Given this information, what is the minimum cost per can that the company would incur to meet the blending requirements for Yum-Mix?

a. $1.80
b. $2.60
c. $3.20
d. $4.00

Answer 1

The minimum cost per can that the company would incur to meet the blending requirements for Yum-Mix is $2.60

Step-by-step explanation:

To find the minimum cost per can that the company would incur to meet the blending requirements for Yum-Mix, we need to compare the costs of adding different proportions of the two ingredients. Let's assume the company adds 30% of ingredient X and 70% of ingredient Y. The cost per can would be calculated as follows:

Cost per can = (30% x cost of X) + (70% x cost of Y)

= (30% x $4) + (70% x $2) = $1.20 + $1.40 = $2.60

Therefore, the minimum cost per can that the company would incur to meet the blending requirements for Yum-Mix is $2.60 (option b).