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A company is calculating the relevant cost of a material required in the new contract. The Contract requires 2500 Kgs of raw material X. The
A company is calculating the relevant cost of a material required in the new contract. The Contract requires 2500 Kgs of raw material X. The company presently has 500kg of X in stock which was purchased in the past for RO8.500 per kg. The company can sell the stock of X for RO4.5per kg. The company could modify X at a cost of RO2.500 per kg and use it as a substitute for Y which costs RO7.250 per kg. The current market price of X is RO 9.500 per kg.
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