Question
A company intends to quote for making a unique product which will need 15 kg of titanium and 20 kg of carbon fibre. The following
A company intends to quote for making a unique product which will need 15 kg of titanium and 20 kg of carbon fibre. The following information refers to these two metals.
| Metal | Amount in stock (Kg) | Original price of stock/Kg | Current purchase price/Kg | Current net realizable value/Kg |
| Titanium | 10 | $5,000 | $6,000 | $4,000 |
| Carbon fibre | 30 | $800 | $1,000 | $700 |
Carbon fibre is used on a regular basis by the company but titanium is not; if the contract is not awarded, the company will not purchase any more titanium to hold in stock. What is the relevant cost of the materials if they are used to manufacture the unique machine?
Question 7 options:
|
| $40,000 |
|
| $60,000 |
|
| $54,000 |
|
| $20,000 |
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Audit Guide Audit Sampling
Authors: AICPA
2nd Edition
195068833X, 978-1950688333
