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Hi,
With regards to the above in the BPP revision kit, Can i undestand why the relevnt cost for material k includes all 3000kg of material? Shouldn’t it be 1000kg only as 2000kg was already purchased last month and should be sunk cost which should be excluded?
Material K is used regularly by the company. If material is used regularly then it needs to be replaced and the relevant cost is therefore the current purchase price. (If there was no other use for it, then the relevant cost would be any lost scrap value.)
I do suggest that you watch our free lectures on this, because getting the relevant cost for materials in different situations is a very standard question.
(Our lectures are a complete course for Paper F5 and covered everything you need to be able to pass the exam well.)
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