Asked by Candace Shields on May 14, 2024
Verified
Hamby Corporation is preparing a bid for a special order that would require 780 liters of material W34C.The company already has 640 liters of this raw material in stock that originally cost $8.30 per liter.Material W34C 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 $7.60 per liter.New stocks of the material can be readily purchased for $8.35 per liter.What is the relevant cost of the 780 liters of the raw material when deciding how much to bid on the special order?
A) $6,481
B) $6,376
C) $6,513
D) $5,928
Special Order
An order for goods or services that is outside the company's normal production routine or product range.
Resale Value
The estimated amount that an asset or good will be sold for at the end of its useful life.
- Grasp the theories pertaining to costs that are essential and non-essential when faced with decisions.
Verified Answer
ZS
zinabu shiferawMay 18, 2024
Final Answer :
C
Explanation :
The relevant cost is the current market cost which is 780 liters × current market $8.35 per liter = $6,513.
Learning Objectives
- Grasp the theories pertaining to costs that are essential and non-essential when faced with decisions.