14. If Material B is used regularly by Lloyd Industries Ltd, and if units of B are required for this job, they would need to be replaced to meet other production demands. What is the relevant cost for this material B? Lloyd Industries Ltd. has been approached by a customer who would like a special job to be done for him and is willing to pay $60,000 for it. The job would require the following materials. Material Total units required Replacement cost S/unit Units Book value of Realizable already in stock units in stock value $/unit $/unit A 1000 16.00 1000 1000 600 12.00 12.50 15.00 700 13.00 12.50 14.00 200 200 14.00 16.00 19.00 a. $6 000 b. $9 000 С. $15 000 d. $11 000 15. In making a short-term special decision, which of the following is MOST important? a. Use a conventional absorption costing method b. Focus on the total cost C. Separate variable and fixed costs d. Discount cash flow to their present values
14. If Material B is used regularly by Lloyd Industries Ltd, and if units of B are required for this job, they would need to be replaced to meet other production demands. What is the relevant cost for this material B? Lloyd Industries Ltd. has been approached by a customer who would like a special job to be done for him and is willing to pay $60,000 for it. The job would require the following materials. Material Total units required Replacement cost S/unit Units Book value of Realizable already in stock units in stock value $/unit $/unit A 1000 16.00 1000 1000 600 12.00 12.50 15.00 700 13.00 12.50 14.00 200 200 14.00 16.00 19.00 a. $6 000 b. $9 000 С. $15 000 d. $11 000 15. In making a short-term special decision, which of the following is MOST important? a. Use a conventional absorption costing method b. Focus on the total cost C. Separate variable and fixed costs d. Discount cash flow to their present values
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:14. If Material B is used regularly by Lloyd Industries Ltd, and if units of B are required
for this job, they would need to be replaced to meet other production demands.
What is the relevant cost for this material B?
Lloyd Industries Ltd. has been approached by a customer who would like a special job to be
done for him and is willing to pay $60,000 for it. The job would require the following materials.
Material Total units
required
Realizable
value $/unit
Units
Replacement
cost $/unit
Book value of
already in
stock
units in stock
$/unit
A
1000
16.00
B
1000
600
12.00
12.50
15.00
C
1000
700
13.00
12.50
14.00
D
200
200
14.00
16.00
19.00
a.
$6 000
b.
$9 000
С.
$15 000
d.
$11 000
15. In making a short-term special decision, which of the following is MOST
important?
a.
Use a conventional absorption costing method
b.
Focus on the total cost
C.
Separate variable and fixed costs
d.
Discount cash flow to their present values
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