CAF-5 · Chapter 14 · Question 4 of 10
A specific job requires 50 kg of a special material, "Wire-D". The supplier only sells this material in minimum batch sizes of 60 kg at a price of Rs. 10 per kg. The remaining 10 kg will have no alternative use for the company and cannot be sold for scrap. What is the relevant cost of this material for the special job?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 600
Explanation
The supplier mandates a minimum order of 60 kg. Since the remaining 10 kg has no alternative use or scrap value, the entire cash outflow caused by the decision to accept the job is the cost of the full 60 kg (60 kg × Rs. 10 = Rs. 600).
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