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Schickel Inc. regularly uses material B39U and currently has in stock 462 liters of the material...

Schickel Inc. regularly uses material B39U and currently has in stock 462 liters of the material for which it paid $2,624 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.28 per liter. New stocks of the material can be purchased on the open market for $5.80 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 550 liters of the material to be used in a job for a customer. The relevant cost of the 550 liters of material B39U is:

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Answer #1

Answer:

Working:

The Relevant cost would be = 550 Liters X $5.80= $3,190

Explanation:

The Old stock is not relevant cost here, because the cost have already been incurred in the past and the same can not be used to the new job, because the stock fell short of what is required to complete the job. It, may also be noted that B39U must be purchased in 1000.

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