Narciso Corporation is preparing a bid for a special order that would require 880 liters of material R19S. The company already h

Question

3 years ago

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Narciso Corporation is preparing a bid for a special order that would require 880 liters of material R19S. The company already h

as 280 liters of this raw material in stock that originally cost $6.10 per liter. Material R19S is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $5.45 per liter. New stocks of the material can be readily purchased for $6.20 per liter. What is the relevant cost of the 880 liters of the raw material when deciding how much to bid on the special order?

Business

1 answer:

bija089 [108] · Answer 1 · 2022-04-17T14:14:42+03:00

Answer:

$5,456

Explanation:

A relevant cost can be defined as the cost that are said to be in form of a future cash cost that is relevant and important to a particular decision.

The relevant cost:

Current market cost 880 liters × Current market $6.20 per liter

= $5,456.

Therefore the relevant cost of the 880 liters of the raw material when deciding how much to bid on the special order will be $5,456