Calculate raw material cost per pound sold, for each source. 4. Calculate direct labor cost per pound sold for: a. Grading. b. Cutting. (consider yields carefully). 5. Calculate packing cost (labor and material) per pound sold. 6. Calculate variable overhead per pound sold for the junk source. 7. Items 1 to 6 represent profit contribution by purchasing source. 8. Assign fixed overhead costs to each of the five purchasing sources: 9. Item 7 less item 8 represents full cost profit by source. Now, what does this have to do with the management issues? Specifically: 1. How close is the company to an optimal sourcing mix?

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To assess how close the company is to an optimal sourcing mix we need to evaluate the profit contrib... View the full answer