Question

Intercontinental’s special order requires 1,300 kilograms of genatope, a solid chemical regularly used in the company’s products. The current stock of genatope is 9,900 kilograms at a book value of 9.20 p per kilogram. If the special order is accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 9.80 p per kilogram. Without the special order, the purchasing manager predicts that the price will be 9.40 p when normal restocking takes place. Any order of genatope must be in the amount of 6,600 kilograms.

Answer 1

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