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Material not in regular use

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Material not in regular use

  • This topic has 1 reply, 2 voices, and was last updated 7 months ago by John Moffat.
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  • November 12, 2021 at 8:51 am #640464
    SarahSyed
    • Topics: 10
    • Replies: 1
    • ☆

    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.

    November 12, 2021 at 5:45 pm #640491
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49628
    • ☆☆☆☆☆

    I do not know what you are asking me because what you have written is correct.

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