Narciso Corporation Is Preparing a Bid for a Special Order

question 123

Multiple Choice

Narciso Corporation is preparing a bid for a special order that would require 880 liters of material R19S. The company already has 280 liters of this raw material in stock that originally cost $6.10 per liter. Material R19S is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $5.45 per liter. New stocks of the material can be readily purchased for $6.20 per liter. What is the relevant cost of the 880 liters of the raw material when deciding how much to bid on the special order?

• A)$5,006
• B)$5,456
• C)$4,796
• D)$5,056

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Definitions:

Conspicuous Consumption

The act of buying and using products to make a statement about social status rather than to meet the basic needs.

Closed System

A social system in which status is based on attributes ascribed at birth.

Ascribed Status

Attributes (advantages and disadvantages) assigned at birth (e.g., sex).

Intelligence Quotient

A measure of a person's intellectual abilities in relation to their age group, typically assessed by standardized tests.