Schemm Inc

question 40

Multiple Choice

Schemm Inc.regularly uses material F04E and currently has in stock 460 liters of the material for which it paid $2,622 several weeks ago.If this were to be sold as is on the open market as surplus material,it would fetch $5.25 per liter.New stocks of the material can be purchased on the open market for $5.85 per liter,but it must be purchased in lots of 1,000 liters.You have been asked to determine the relevant cost of 800 liters of the material to be used in a job for a customer.The relevant cost of the 800 liters of material F04E is: (CIMA adapted)

• A)$5,850.
• B)$4,200.
• C)$4,404.
• D)$4,680.

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Definitions:

Expensive

Having a high price or cost; signifying that a good or service costs a lot, often more than what is considered reasonable or affordable.

Aggregate

A total or combined amount, sum, or mass made up of distinct or varied parts.

Inventories

Quantities of goods or materials that a business holds for the purpose of sale or production, representing a current asset on the company’s balance sheet.

Fast Mode

A rapid operation or processing speed in a system, aiming to reduce time without compromising efficiency.