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Take Money Ltd is considering the costs to be incurred in respect of a special order opportunity

Accounting

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.

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