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Bronty Co is considering whether to undertake some contract work for a customer. The machinery required for the contract would be as follows:
A special cutting machine will have to be hired for three months for the work (the length of the contract). Hire charges for this machine are $75 per month, with a minimum hire charge of $300.
Sir can you specify what will be the relevant cost in this case, and why exactly?
Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations!
The relevant cost is $300 because this is how much they would have to pay to hire the machine.
Have you watched my free lectures on relevant costing?
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