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Bright Limited is considering whether or not to accept a special contract to supply 2,000 identical units of component X to a customer. To manufacture one unit of component X, Bright requires 4kg of material A. Bright currently has 3,000kg of material A in stock which had an original cost of £4.20 per kg. The current replacement cost of material A is £4.75 per kg and its scrap value is £2 per kg; material A is in constant use by the business. What is the total relevant cost of using material A for this special contract? f29 750

Bright Limited is considering whether or not to accept a special contract to supply 2,000 identical units of component X to a customer. To manufacture one unit of component X, Bright requires 4kg of material A. Bright currently has 3,000kg of material A in stock which had an original cost of £4.20 per kg. The current replacement cost of material A is £4.75 per kg and its scrap value is £2 per kg; material A is in constant use by the business. What is the total relevant cost of using material A for this special contract? f29 750

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bright Limited is considering whether or not to accept a special contract to supply 2,000 identical units of component X to a customer. To manufacture one unit of component X, Bright requires 4kg of material A. Bright currently has 3,000kg of material A in stock which had an original cost of £4.20 per kg. The current replacement cost of material A is £4.75 per kg and its scrap value is £2 per kg; material A is in constant use by the business. What is the total relevant cost of using material A for this special contract? O a. £29,750 O b. £23,750 O c. £36,350 O d. £38,000
Transcribed Image Text:Bright Limited is considering whether or not to accept a special contract to supply 2,000 identical units of component X to a customer. To manufacture one unit of component X, Bright requires 4kg of material A. Bright currently has 3,000kg of material A in stock which had an original cost of £4.20 per kg. The current replacement cost of material A is £4.75 per kg and its scrap value is £2 per kg; material A is in constant use by the business. What is the total relevant cost of using material A for this special contract? O a. £29,750 O b. £23,750 O c. £36,350 O d. £38,000
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