Calculate the economic profit and relevent cost, Cost Accounting

A. Bolero Industries Ltd. has been approached by a customer who would like a special job to be done for her, and is willing to pay $60,000 for it. The job would require the following materials.


i) Material B is used regularly by Bolero, and would need to be replaced to meet other production demands.

ii) Materials C and D are in stock due to previous over-buying, and have restricted use. Bolero has no other use for material C, but the units of material D could be used in another job as a substitute for 300 units of material E, which currently costs $15 per unit (of which the company has no units in stock at the moment).

iii) Should Bolero take the job? Which costs are relevant? Explain the reason you included/excluded each cost. Calculate the economic profit associated with job. Interpret this number in terms of Bolero's opportunities.

Posted Date: 2/20/2013 4:22:12 AM | Location : United States

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