A company requires two materials ‘X’ and ‘Y’ for executing a new order. The order requires 2000units of ‘X’ and 1200 units of ‘Y’. The company presently has 500 units of ‘X’ and 600 units of ‘Y’. The company no longer has any use for X. The company can sell the stock of “X’ for RO8 per unit. The raw material ‘Y’ can be used as a substitute for 400 units of ‘Z’ which costs RO 5 per unit. The company can also sell the stock of ‘Y’ at RO 4 per unit. The current market price of ‘X’ and ‘Y’ is RO 12 and RO9 respectively. Calculate the relevant cost of the order.

A company requires two materials ‘X’ and ‘Y’ for executing a new order. The order requires 2000units of ‘X’ and 1200 units of ‘Y’. The company presently has 500 units of ‘X’ and 600 units of ‘Y’. The company no longer has any use for X. The company can sell the stock of “X’ for RO8 per unit. The raw material ‘Y’ can be used as a substitute for 400 units of ‘Z’ which costs RO 5 per unit. The company can also sell the stock of ‘Y’ at RO 4 per unit. The current market price of ‘X’ and ‘Y’ is RO 12 and RO9 respectively. Calculate the relevant cost of the order.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 18E: A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price...

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