Schickel Inc

question 140

Multiple Choice

Schickel Inc.regularly uses material B39U and currently has in stock 460 liters of the material for which it paid $3,128 several weeks ago.If this were to be sold as is on the open market as surplus material,it would fetch $5.95 per liter.New stocks of the material can be purchased on the open market for $6.45 per liter,but it must be purchased in lots of 1,000 liters.You have been asked to determine the relevant cost of 760 liters of the material to be used in a job for a customer.The relevant cost of the 760 liters of material B39U is:

• A) $4,902
• B) $4,672
• C) $4,522
• D) $6,450

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Definitions:

Operating Lease

A lease agreement allowing a user to rent an asset without the benefits or responsibilities of ownership, typically with shorter lease terms.

Debt to Stockholders' Equity

A financial ratio that measures the company's financial leverage by comparing its total liabilities to stockholders' equity.

Capital Lease

A lease treated like a purchase by the lessee in accounting, meaning the leased asset is included on the balance sheet, and the corresponding lease obligation is treated as a liability.

Operating Lease

A lease agreement that allows for the use of an asset but does not convey rights of ownership to the lessee.