Basic. X plc intends to use relevant costs as the basis of the selling price for a

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Basic. X plc intends to use relevant costs as the basis of the selling price for a special order: the printing of a brochure.

The brochure requires a particular type of paper that is not regularly used by X plc although a limited amount is in X plc’s inventory which was left over from a previous job. The cost when X plc bought this paper last year was $15 per ream and there are 100 reams in inventory. The brochure requires 250 reams. The current market price of the paper is $26 per ream, and the resale value of the paper in inventory is $10 per ream.

The relevant cost of the paper to be used in printing the brochure is:

(a) $2500

(b) $4900

(c) $5400

(d) $6500 CIMA P2 Management Accounting: Decision Management

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