Computing cost of the raw material

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Reference no: EM1336137

McNeilly Inc. is considering using stocks of an old raw material in a special project. The special project would require all 220 kilograms of the raw material that are in stock and that originally cost the company $1804 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $8.55 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $7.75 per kilogram if it were not used int he special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $97 for all 220 kilograms. What is the relevant cost of the 220 kilograms of the raw material when deciding weather to proceed with the special project.

a) $1,705,

b) $1,881,

c) $1,804,

d) $1,608.

Reference no: EM1336137

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