Relevant costing

Sir, could you please help with the following example: H has inventory 15000 kg of M raw material bought 3$/kg for product line discontinued. M has no use but could be sold as scrap for $1 per kg. One of company's current products HN requires 4 kg of raw material available for $5/kg. M can be modified at cost of $0. 75/kg to be used as a substitute for this material. But after modification 5 kg of M is required for every unit of HN. What is relevant cost per kg of M to be included in the cost estimate for the tender? Calculation of M used for HN gives $3, 25 /kg and this is right answer. But why not $4 since it is higher? (selling as scrap)