- This topic has 1 reply, 2 voices, and was last updated 7 months ago by John Moffat.
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If we have materials already available in the stock but they are not regularly used elsewhere in the company.
Well we can either sell them or use them on another project and hence lose the expected income (i.e. opportunity cost)
The relevant cost of using them is the higher of: –
• current resale value
• alternative use value
My question is that the resale value is the lost income that we could have earned by selling the material that is not regularly used in the scrap.
While alternative use is when the material which is not regularly used is not utilized in the relevant contract so it is the lost income that we could have earned by using the material in the contract rather we have used the material somewhere else in the company in a different project.
I do not know what you are asking me because what you have written is correct.