this question has been taken from September 2019 examiner report
last time someone calculated the way i also calculated found 8800 in the same way but the answer is not 8800 it is 9200.
1) Conversion of Material Y to Material Z (18$ scrap value+4$ modification cost)=22
2)Buy Material Z in one month’s time-24$ per kg
3)Buy Material Z and store it for one month time–20$/0.8=25
the answer is 22*200+24*200=9200
200*24 here is understandable but 22*200 is not for me still.
the answer is not 8800 the answer is 9200
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relevant cost
5y ago#1I have answered your question before, but made one small error.
I wrote: "In the case of question 1, they will convert the 200 kg of Y into Z and so the cost per kg is 18 + 2 = $20. The other 200 kg needed will have to be purchases and will cost $24 per kg"
It should have been obvious to you when you read it that I had added $2 as the cost of converting X into Z when I should have added $4.
So it should have read: "In the case of question 1, they will convert the 200 kg of Y into Z and so the cost per kg is 18 + 4 = $22. The other 200 kg needed will have to be purchases and will cost $24 per kg"
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