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Cost of Material Y in inventory=$24800
The price of Y, a material in common use has been doubled since it was purchased its NRV, if resold would be its new price less 15% disposal costs,alternatively it could be kept for use on other contracts
M.V=$49600(24800*2)
NRV=49600-49600*15%
=$42160
I understand the relevant cost would be the M.V my question is wouldn’t we add the saving of 49600*15%=$7440 to relevant cost of $49600?
kindly help thanksIt is because they will not be selling it. If they don’t use it in this project then they will use it in other contracts. Therefore if they do use it for this project they will have to replace it at its current market value.
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