Edward Jingo runs a modern sawmill in Old Trafford, Manchester. The company received an order for its MIC wood for which the labor and machine time is available but requires three types of wood materials namely: Mahogany, Iroko, and Cedar (MIC).
Mahogany wood: This material is used regularly within the firm for various products. The new order will require 1,500 centimeters. The present stock is 21,000 centimeters purchased at £2.50 per centimeter.

The current replenishment price is £2.65 per centimeter and it is estimated that that if 1,500 centimeters is used on the new order, the normal stock replenishment order for its MIC wood will have to be brought forward 3 weeks at which time it is estimated that the replenishment price will be £2.70 per centimeters.
Iroko wood: 1,000 centimeters of this material are in stock purchased at £0.85 per centimeter and the new order requires 800 centimeters. Because of heavy usage, the material is purchased weekly and the current price is £0.55 per centimeter.
Cedar wood: 5,000 centimeters are required for the order and large quantities are in stock purchased at £0.18 per centimeter. Because of heavy usage, the material is purchased weekly and the current price is £0.21 per centimeter.

Required

1. What is the relevant cost for decision making purposes of each of the three categories of wood?
2. Why does management need to assess the relevant costs of each of the above in decision making?