Solution-What is the minimum acceptable selling price of

What is the minimum acceptable selling price of material r

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Question - Milford Corporation has in stock 16,100 kilograms of material R that it bought five years ago for P5.75 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material R can be sold as is for scrap for P3.91 per kilogram. An alternative would be to use material R in one of the company's current products, S88Y, which currently requires 2 kilograms of a raw material that is available for P7.60 per kilogram. Material R can be modified at a cost of P0.77 per kilogram so that it can be used as a substitute for this material in the production of product S88Y. However, after modification, 4 kilograms of material R is required for every unit of product S88Y that is produced. Milford Corporation has now received a request from a company that could use material R in its production process. Assuming that Milford Corporation could use all of its stock of material R to make product S88Y or the company could sell all of its stock of the material at the current scrap price of P3.91 per kilogram, what is the minimum acceptable selling price of material R to the company that could use material R in its own production process?

Reference no: EM132966920

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What is the minimum acceptable selling price of material r

Reference no: EM132966920

Reference no: EM132966920

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