Milford Corporation Has in Stock 16,100 Kilograms of Material R

question 42

Multiple Choice

Milford Corporation has in stock 16,100 kilograms of material R that it bought five years ago for $5.75 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material R can be sold as is for scrap for $3.91 per kilogram. An alternative would be to use material R in one of the company's current products, S88Y, which currently requires 2 kilograms of a raw material that is available for $7.60 per kilogram. Material R can be modified at a cost of $0.77 per kilogram so that it can be used as a substitute for this material in the production of product S88Y. However, after modification, 4 kilograms of material R is required for every unit of product S88Y that is produced. Milford Corporation has now received a request from a company that could use material R in its production process. Assuming that Milford Corporation could use all of its stock of material R to make product S88Y or the company could sell all of its stock of the material at the current scrap price of $3.91 per kilogram, what is the minimum acceptable selling price of material R to the company that could use material R in its own production process? (Round your intermediate calculations to 2 decimal places.)

• A) $0.88 per kg
• B) $3.03 per kg
• C) $4.57 per kg
• D) $3.91 per kg

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Definitions:

Infundibulum

The tube-shaped end of each fallopian tube.

Clitoris

A sensitive organ located at the anterior end of the vulva, involved in female sexual pleasure.

Endometrium

The inner lining of the uterus, which thickens during the menstrual cycle in preparation for potential implantation of an embryo.

Cervix

The lower part of the uterus connecting to the vagina; plays a critical role in childbirth and menstruation.