Your company regularly uses material X and currently has in inventory 500 kg for which it paid $1,500 two weeks ago. If this were to be sold as raw material, it could be sold today for $2.00 per kg. You are aware that the material can be bought on the open market for $3.25 per kg, but it must be purchased in quantities of 1,000 kg. What is the relevant cost of 600 kg needed to be used in a job for a customer?
A、$1,325
B、$1,825
C、$1,950
D、$3,250
A、$1,325
B、$1,825
C、$1,950
D、$3,250
【参考答案及解析】
The correct answer is: $1,950. The material is in regular use so the relevant cost is 500 kg in inventory at the replacement cost of $3.25. The other 100 will need to be purchased at a cost of $3.25. The total is therefore 600 × 3.25 = $1,950. If you selected $1,325 you valued the inventory at their resale value. The items are in regular use so they would not be resold. $1,825 values the items at their original purchase price but this is a sunk cost. $3,250 is the cost of the full 1,000 kg that must be purchased. However, as the material is regularly used it can be kept in inventory till needed.
The correct answer is: $1,950. The material is in regular use so the relevant cost is 500 kg in inventory at the replacement cost of $3.25. The other 100 will need to be purchased at a cost of $3.25. The total is therefore 600 × 3.25 = $1,950. If you selected $1,325 you valued the inventory at their resale value. The items are in regular use so they would not be resold. $1,825 values the items at their original purchase price but this is a sunk cost. $3,250 is the cost of the full 1,000 kg that must be purchased. However, as the material is regularly used it can be kept in inventory till needed.