Schemm Inc. regularly uses material F04E and currently has in stock 470 liters o

Question

Schemm Inc. regularly uses material F04E and currently has in stock 470 liters of the material for which it paid $2,632 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.36 per liter. New stocks of the material can be purchased on the open market for $5.96 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 F04E is:

1) $4,482

2) $4,288

3) $4,768

4) $5,960

Explanation / Answer

Relevant cost =800*5.96=4768

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