A chemical company produces a special industrial chemical that is a blend of three chemical ingredients. The beginning-year cost per pound, the ending-year cost per pound, and the blend proportions follow. (Round your answers to the nearest integer.) Cost per Pound ($)
IngredientBeginningEndingQuantity (pounds)
per 100 Pounds of Product
A1.503.4525
B8.759.9015
C0.990.9050
(a)

Compute the price relatives for the three ingredients.

ItemPrice Relative
A
B
C
(b)

Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product.

I =

What is your interpretation of this index value?

Cost of raw materials is up % for the chemical.