Lampshire Inc. is considering using stocks of an old raw material in a special p

Question

Lampshire Inc. is considering using stocks of an old raw material in a special project. The special project would require all 160 kilograms of the raw material that are in stock and that originally cost the company $1,136 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $7.25 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.50 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $75 for all 160 kilograms.

What is the relevant cost of the 160 kilograms of the raw material when deciding whether to proceed with the special project?

$1,040

$965

$1,136

$1,160

a.

$1,040

b.

$965

c.

$1,136

d.

$1,160

Explanation / Answer

option B $965

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Relevant cost sale price (160*6.0) 1040 less Delivery cost -75 Relevant cost 965

option B $965

Please appreciate the efforts and give a like for the correct and quick answer. Thanks

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