Question 15.
Sir, I've done my calculations as follows :
1,500kg - 945kg = 555kg x $4.25kg = $2,358.75
945kg x $4.50 = $4,252.50
total relevant cost of material b is $4,252.50 + $2,358.75 = $6,611.25
why I multiplied the inventory with the purchased price was because it is not used for the order.
I am wrong because the purchase price of $4.50 is a sunk cost and not relevant?
Ask the Tutor ACCA PM
F5 Specimen December 2014
10y ago#1True - the original purchase price is never relevant.
It will help you to watch my free lecture on relevant costing.
(Our lectures are a complete course for Paper F5 and cover everything you need to be able to pass the exam well.)
What you might also find useful is that I have uploaded lectures working through all of the specimen exam questions.
You can find them by following the link to "F5 Revision Kit Live" from the main Paper F5 page.
alright. thanks.
10y ago#3You are welcome :-)
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