Question

Schickel Inc. regularly uses material B39U and currently has in stock 456 liters of the material for which it paid $2618 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.20 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 1000 liters. You have been asked to determine the relevant cost of 750 liters of the material to be used in a job for a customer. The relevant cost of the 750 liters of material B39U is:

Answer 1

the relevant cost of the 750 liters of material B39U is $4,350

Step-by-step explanation:

The computation of the relevant cost of the 750 liters of material B39U is shown below:

Relevant cost = Purchase price per liter × Liters needed for the job

= $5.80 per liter × 750 liters

= $4,350 .

Hence, the relevant cost of the 750 liters of material B39U is $4,350