Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
Related questions
Question
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3bfe5996-06f1-48d4-9c59-ca3b0b1a0d2f%2F90877f7a-031a-4afa-9a6b-67fd8a25f41e%2F3kcujad_processed.png&w=3840&q=75)
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.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 4 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,