UU Company has been asked to quote for a special contract. The following information about the material needed has been given: Material X: Book value Scrap value Replacement cost $5.00 per kg $0.50 per kg $5.50 per kg The contract requires 10 kgs of Material X. There are 250 kgs of this material in inventory which was purchased in error over two years ago. If Material X is modified, at a cost of $2 per kg, it could then be used as a substitute for material Y which is in regular use and currently costs $6 per kg. What is the relevant cost of the materials for the special contract?
A、$5
B、$40
C、$50
D、$55
A、$5
B、$40
C、$50
D、$55
【参考答案及解析】
The book value is an historic cost and therefore not relevant. There is no intention to replace material X. There are two options for material X, scrap at a value of 50p per kg or use as a replacement for material Y, which would save $4 per kg ($6 – $2). The latter is the preferable option so the relevant cost is $4 per kg for 10 kgs = $40.
The book value is an historic cost and therefore not relevant. There is no intention to replace material X. There are two options for material X, scrap at a value of 50p per kg or use as a replacement for material Y, which would save $4 per kg ($6 – $2). The latter is the preferable option so the relevant cost is $4 per kg for 10 kgs = $40.