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Sir pls explain this.
Taking a special order from a customer.
Mat x :
Total quantity required : 500kg , currently in inventory : 300kg , carrying value : $5 per kg, realisable value : $3 per kg, replecement cost : $7 per kg..it says mat x are no longer in regular use.There is no alternative use for mat x. calculate relevant cost for mat x.. They solved it this way, 500.3=1500$ .. I failed to get it..pls help.You do not say who “they” are, but I am guessing that it is a BPP Revision Kit question.
They have made a mistake in the answer.The correct relevant cost is (300 x $3) + (200 x $7) = $2,300.
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