Minimum Price.

Dear Sir,

I have a question about the minimum price, but at the time I calculated cost of material X, I was a little bit confused.

The following information’s available for identifying the relevent cost of materials for a job for a customer. The company’s management wants to establish a minimum price at which it’s prepared to take on the job.

Material—Total quantity—Currently in—Carrying value—-Realisable value–Replacement
—————–required———inventory———per kg—————per kg————–cost per kg
——————–kg——————kg—————–$———————$————————$
W—————–500——————0——————0———————0————————8
X—————–500——————300————–5———————-3————————7
Y——————500—————–400————–8———————-9————————11
Z——————100——————100————-10——————–12———————–15

Material Y is in regular use by the company. Materials X and Z are no longer in regular use. There is no alternative use for Material X but the 100kg of Material Z could be used of 150kg of Material V on a different job. Material V costs $9 per kg and there is currently none of this material in inventory

A) $10,850
B) $11,350
C) $12,200
D)$12,350

Which way of material X shoud be valued, 300kg @ $5, and cost of replacement 200kg at $7? -> Total $2,900
Or 500kg at $3? -> Total $1,500