What is the relevant cost of the raw material

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Reference no: EM132731314

Question - Otool Inc. is considering using stocks of an old raw material in a special project. The special project would require all 160 kilograms of the raw material that are in stock and that originally cost the company $1,336 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $7 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.65 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of $77 for all 160 kilograms. What is the relevant cost of the 160 kilograms of the raw material when deciding whether to proceed with the special project?

a. $1,064

b. $987

c. $1,162

d. $1,176

Reference no: EM132731314

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