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Narciso Corporation is preparing a bid for a special order that would require 880 liters of material R19S. The company already has 280 liters of this raw material in stock that originally cost $6.10 per liter. Material R19S is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $5.45 per liter. New stocks of the material can be readily purchased for $6.20 per liter. What is the relevant cost of the 880 liters of the raw material when deciding how much to bid on the special order?

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abiolataiwo2015

Answer:

$5,456

Explanation:

A relevant cost can be defined as the cost that are said to be in form of a future cash cost that is relevant and important to a particular decision.

The relevant cost:

Current market cost 880 liters × Current market $6.20 per liter

= $5,456.

Therefore the relevant cost of the 880 liters of the raw material when deciding how much to bid on the special order will be $5,456

The relevant cost of the 880 liters of the raw material when deciding how much to bid on the special order is $5,456.

Given that,

  • The company already has 280 liters of this raw material in stock that originally cost $6.10 per liter.
  • The resale value of the existing stock of the material is $5.45 per liter. New stocks of the material can be readily purchased for $6.20 per liter.

Based on the above information, the calculation is as follows:

[tex]= 880 \times \$6.20[/tex]

= $5,456

Learn more: brainly.com/question/17429689

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