Wonders Corporation is preparing a bid for a special order that would require 71

Question

Wonders Corporation is preparing a bid for a special order that would require 710 liters of material A52N. The company already has 560 liters of this raw material in stock that originally cost $6.30 per liter. Material A52N 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 $5.85 per liter. New stocks of the material can be readily purchased for $6.45 per liter. What is the relevant cost of the 710 liters of the raw material when deciding how much to bid on the special order?

Select one: a. $4,795.20 b. $4,153.50 c. $3,528.10 d. $4,579.50

Explanation / Answer

The relevant cost for the bid on he special order is the new purchase price

ie

710 * 6.45 = 4579.50

Hence the last option is correct

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