Schickel Incorporated Regularly Uses Material B39U and Currently Has in Stock

question 265

Multiple Choice

Schickel Incorporated regularly uses material B39U and currently has in stock 457 liters of the material for which it paid $2,619 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.21 per liter. New stocks of the material can be purchased on the open market for $5.81 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 700 liters of the material to be used in a job for a customer. The relevant cost of the 700 liters of material B39U is:

• A) $5,810
• B) $3,647
• C) $3,794
• D) $4,067

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