Question A9
A company is using a relevant costing approach in producing a price for a tender for a one-off contract.
The contract needs 15kg of material Y. It currently costs £100 per kg to purchase material Y.
The company has 10kg of this material in stock from a previous contract, it cost £85 per kg when purchased two years ago and it will not be used in the ordinary course of business.
If it is not used for this contract the company has found a buyer for the quantity of material Y held, they are willing to pay £90 per kg for the material although it will cost £50 to pack and ship the material to the buyer.
What is the relevant cost of material Y for the contract?
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