help me solve the following,
a company has 2000kg of material for a contract it has been asked to quote for. they currently have 1500kg in inventory and the material has no other use. the inventory originally cost $8 per kg , the current cost is $10 per kg and material could be sold for $9 per kg.
what is the relevant cost for the material required for the contract?
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Decision making practice test
10y ago#1You really should watch the free lecture on this because this is a very standard question!!
(Our lectures are a complete course for Paper F5 and cover everything you need to be able to pass the exam well!)
For the 1500 kg in inventory, it is the opportunity cost of the lost sale proceeds which is $9 per kg.
The other 500 kg will have to be purchased at the current cost of $10 per kg.
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