Relevant Costing Example(BPP Question 20.9)

The following information is available for identifying the relevant cost of materials for a job for a customer. The company’s management wants to establish a minimum price at which it is prepared to take on the job. Material Total quantity required Currently in inventory Carrying value per kg Realisable value per kg Replacement cost per kg kg kg $ $ $ W 500 0 – – 8 X 500 300 5 3 7 Y 500 400 8 9 11 Z 100 100 10 12 15 Material Y is in regular use by the company. Materials X and Z are no longer in regular use. There is no alternative use for Material X but the 100 kg of Material Z could be used instead of 150 kg of Material V on a different job. Material V costs $9 per kg and there is currently none of this material in inventory. What is the relevant cost of these materials for the job under consideration? A $10,850 B $11,350 C $12,200 D $12,350 20.9 D (Syllabus area B1(b)) $ Material W 500 kg × $8 =4,000 Material X 500 kg × $3 =1,500 Material Y 500 kg × $ =11 5,500 Material Z Higher of (100 × $12) and (150 × $9) =1,350 =12,350 Hi Mike I am having trouble with the cost of X we have 300 in inventory and we need 500 for the special job,so i costed at 300 x NRV which is 3 and 200 with the replacement cost per kg but the kit has multiplied the 500 with 3(NRV) Kindly clarify