Scherer Corporation is preparing a bid for a special order that would require 91
ID: 2463021 • Letter: S
Question
Scherer Corporation is preparing a bid for a special order that would require 910 liters of material U48N. The company already has 750 liters of this raw material in stock that originally cost $8.20 per liter. Material U48N is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $7.70 per liter. New stocks of the material can be readily purchased for $8.55 per liter. What is the relevant cost of the 910 liters of the raw material when deciding how much to bid on the special order? $7,780.50. $7,157.00. $6,831.00. $7,007.00.
Explanation / Answer
Answer $ 7780.50
The relevant cost is current market Cost ie Quantity Required *Current Market Price
Quantity required = 910 liters
Current Market Price = $8.55 per Liters
Relevant Cost = 910 liters * $8.55 = $7780.50
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