Required: Compute the relevant cost of each material.

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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1. XYZ Company is considering making a new product which requires several types of raw material:
In Stock
Required
Raw Material
Description
Ayay
Nil
100
Replacement Cost is $5 per unit. This material has
limited supply. This material is also used to produce
another product which has a contribution margin of
$3.5 per unit of material Ayay. All available supply
of material Ayay are needed to produce this
another product.
Benzam
Nil
40
Current purchase price is $7/unit.
Chizzum
100
150
purchased for
$10/unit
Current purchase price is $14/unit. The material
has no use in the company other than for the
project under consideration. Units in inventory can
be sold for $12/unit.
Dedee
120
50 purchased
for $20/unit
Current purchase price is $22/unit. The material is
regularly used in current manufacturing operations.
Required: Compute the relevant cost of each material.
Transcribed Image Text:1. XYZ Company is considering making a new product which requires several types of raw material: In Stock Required Raw Material Description Ayay Nil 100 Replacement Cost is $5 per unit. This material has limited supply. This material is also used to produce another product which has a contribution margin of $3.5 per unit of material Ayay. All available supply of material Ayay are needed to produce this another product. Benzam Nil 40 Current purchase price is $7/unit. Chizzum 100 150 purchased for $10/unit Current purchase price is $14/unit. The material has no use in the company other than for the project under consideration. Units in inventory can be sold for $12/unit. Dedee 120 50 purchased for $20/unit Current purchase price is $22/unit. The material is regularly used in current manufacturing operations. Required: Compute the relevant cost of each material.
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