Stampka Corporation Is a Specialty Component Manufacturer with Idle Capacity

question 129

Multiple Choice

Stampka Corporation is a specialty component manufacturer with idle capacity. Management would like to use its extra capacity to generate additional profits. A potential customer has offered to buy 4,200 units of component JJF. Each unit of JJF requires 6 units of material O38 and 9 units of material P56. Data concerning these two materials follow: Material O38 is in use in many of the company's products and is routinely replenished. Material P56 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up. What would be the relevant cost of the materials, in total, for purposes of determining a minimum acceptable price for the order for product JJF?

• A)$146,790
• B)$199,080
• C)$155,610
• D)$212,340

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