A company is considering the costs for a special order. The order would require 1250kg of material D. This material is readily available and regularly used by the company. There are 265kg of material D in stock which cost £795 last week.

The current market price is £3.24 per kg. Material D is normally used to make product X. Each unit of X requires 3kg of material D and, if material D is costed at

£3 per kg, each unit of X yields a contribution of £15.

The cost of material D to be included in the costing of the special order is nearest to:

(a) £3990

(b) £4050

(c) £10000

(d) £10300

(2 marks)

CIMA Management Accounting -— Performance Management