Otool Inc. is considering using stocks of an old raw material in a special project. The special project would require all 170 kilograms of the raw material that are in stock and that originally cost the company $2436 in total. If the company were to buy new supplies of this raw material on the open market, it would cost $6.9 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of $6.20 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 $65 for all 170 kilograms. What is the relevant cost of the 170 kilograms of the raw material when deciding whether to proceed with the special project?
A. $1150
B. $1173
C. $989
D. $1054
Answer: C
You might also like to view...
Under the payoff method of handling a bank failure, the FDIC
A. takes over the bank and controls its operations. B. closes the bank, sells off the assets, pays off insured depositors, and then pays off creditors of the bank if funds remain. C. keeps the bank open and lends funds to it so that it is able to continue its operation. D. finds a buyer for the bank, giving the buyer the good assets of the bank, and assumes the bad loans of the bank.
Which of the following is the date that management commits itself to a formal plan to dispose of a business segment?
a. The measurement date b. The disposal date c. The assessment date d. The transfer date
Opportunity recognition is the process of identifying and selecting entrepreneurial opportunities. It does not involve the development of those ideas.
Answer the following statement true (T) or false (F)
An investor who requires an 18% percent return for a stock that pays no dividends and requires a
12% return for a stock that pays its entire return from dividends may be following the bird-in-the-hand dividend theory. Indicate whether the statement is true or false