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* There are 265kg of material D in inventory at a cost of $795 * Current market price is $3.24/kg * Opportunity cost is forgone contribution from using material D to make product X instead * Each unit of X uses 3kg of D and contributes $15 * 265kg of D could make 265/3 = 88 units of X, contributing 88 * $15 = $1,320 * Relevant cost is opportunity cost of $1,320 Therefore, the relevant cost of material D for the special order is $1,320

Author

Fatemah Mohamedali

Language

EN