Tara Inc Is Considering Using Stocks of an Old Raw Material

question 146

Multiple Choice

Tara Inc. is considering using stocks of an old raw material in a special project. The special project would require all 160 kilograms of the raw material that are in stock and that originally cost the company $1,136 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $7.25 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.50 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $75.00 for all 160 kilograms. What is the relevant cost of the 160 kilograms of the raw material when deciding whether to proceed with the special project? (CIMA adapted)

• A) $1,040
• B) $965
• C) $1,136
• D) $1,160

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Definitions:

Identical Twins

Twins that develop from a single fertilized egg, sharing the same genetics.

Genetic Factors

Attributes, characteristics, or susceptibilities that are influenced by the genes inherited from one's parents.

Nature and Nurture

A concept that describes the influence of genetic inheritance (nature) and environmental factors (nurture) on the development of traits and behaviors.

Genes

Units of heredity made up of DNA that are responsible for determining the characteristics of an organism.