We appreciate your visit to Louise Ltd regularly uses material FT6 and currently there are 460kg in stock purchased for 3 128 three week ago If this were to be. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
The relevant cost of material FT6 for the once-off order is €4,672. (B)
This is because if the firm decided to use its own stock of 460 kg, it would have to purchase additional 300 kg to meet the 760 kg requirement at €6.45 per kg.
This would result in a total cost of: (460 kg + 300 kg) x €6.45 per kg = €4,672. Hence, option (b) €4,672 is the correct answer.Therefore, Louise Ltd. would have to buy 300 kg of FT6 material at €6.45 per kg to fulfill the order. Therefore, the total cost would be €1,935.
This cost, along with the cost of the current stock would give us the relevant cost of the once-off order. The current stock of FT6 is 460 kg, which was purchased at €3,128.
Therefore, the cost of current stock per kg = 3,128 / 460 = €6.8 per kg. The relevant cost of the once-off order would be = (300 x 6.45) + (460 x 6.8) = €1,935 + €3,128 = €4,672. (B)
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