Stampka corporation is a specialty component manufacturer with idle capacity. Ma

Question

Stampka corporation is a specialty component manufacturer with idle capacity. Management would like to use its extra capacity to generate additional profits. A potential customer has offered to buy 4,200 units of component JJF. Each unit of JJF requires 6 units of material of O38 and 9 units of material P56. Data concerning these two materials follow. Material.......units in stock Original cost per unit current market price per unit disposal value per unit O38...............18600 3.60 3.70 3.35 P56................38,280 3.20 2.80 1.65 What would be the relevant cost of the materials, in total, for purposes of determining minimum acceptable price for the order for product JJF? A) $212,340 B) $146,790 C) $199,080 D) $155,610 I

Explanation / Answer

Stampka corporation is a specialty component manufacturer with idle capacity. Management would like to use its extra capacity to generate additional profits. A potential customer has offered to buy 4,200 units of component JJF. Each unit of JJF requires 6 units of material of O38 and 9 units of material P56. Data concerning these two materials follow. Material.......units in stock Original cost per unit current market price per unit disposal value per unit O38...............18600 3.60 3.70 3.35 P56................38,280 3.20 2.80 1.65 What would be the relevant cost of the materials, in total, for purposes of determining minimum acceptable price for the order for product JJF?

A) $212,340

B) $146,790

C) $199,080

D) $155,610 I

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