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Hello,
Can you please help me with the below question,
Steel has 0.4kg of high quality steel. manufacturing loses 5% of all steel put in. Steel costs $4,000 per tonne (1 tonne=1000 kg).
What will be the cost of steel?
It’s from Kaplan exam kit. Q.no 252 (HAMMER JUNE 2010).
For every 100kg purchased, 5kg will be lost and therefore only 95kg will be available for production.
Putting it the other way round, for every 95kg needed for production, they will have to buy 100kg.
Therefore, on the cost card, for 0.4kg required in production they will need to buy
0.4 x 100/95 kg at a cost of $4,000/1,000 per kg, which gives a cost of $1.68 per unit.
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