A company is evaluating a project that requires 400kg of raw material X. The company has 150kg of X in stock that were purchased six months ago for $55 per kg. The company no longer has any use for X. The inventory of X could be sold for $40 per kg. The current purchase price for X is $53 per kg.
What is the total relevant cost of raw material X for the project?
The Answer is B 19250
The relevant cost is:
150x40=$6000 because it is to be carried in the future
because 150kg are in stock and 250 are more required and there purchase price is 53 So 250x53=13250 answer is 13250+6000=19250