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Homework answers / question archive / Take Money Ltd is considering the costs to be incurred in respect of a special order opportunity
Take Money Ltd is considering the costs to be incurred in respect of a special order opportunity. The order would require 3000 kgs of material D, that is readily available and regularly used by the organisation on its normal products. There are 265 kgs of material D in inventory which cost N$800 last week. The current market price is N$3.50 per kg. Material D is normally used to make product X. Each unit of X requires 3 kgs of material D, and if material D is costed at N$4 per kg, each unit of X yields a contribution of N$16.
here the material is in regulary used by take money ltd and take money ltd can if it used on the special order , here in the given question Take money ltd have special order of 3000 kgs of material D and this material is available at 3.50 per kg
so relevent cost for material D 3000kg is 3000kg X $3.50 = $10500
