Lounsberry Inc. regularly uses material O55P and currently has in stock 360 lite

Question

Lounsberry Inc. regularly uses material O55P and currently has in stock 360 liters of the material for which it paid $2,484 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $6.35 per liter. New stocks of the material can be purchased on the open market for $6.90 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 800 liters of the material to be used in a job for a customer. The relevant cost of the 800 liters of material O55P is: Show work on how arrived at answer

Explanation / Answer

cost if it is purchased new = 1000*6.90 =6900 surplus = 360+1000-800=560 surplus sold = 560*6.35= 3556 bought 360 lt cost =2484 total cost = 6900+2484-3556= 5828

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