Why the material prices are not expected to go up

Reference no: EM13235498

Westside Plumbing and Heating Company is offered a contract for $100,000 to provide plumbing for a new building. The labor and equipment costs are calculated to be $60,000 for fulfilling the contract. Westside has materials in its inventory to complete the job. The raw materials initially cost the firm $50,000; however the material prices have declined in the interim and now cost only $37,500. Thus if the firm chose not to accept the contract and sells the materials, they would incur a loss of $12,500. Material prices are not expected to go up in the future.

Reference no: EM13235498

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