Globals special order also requires 1,700 kilograms of genatope, a solid chemical regularly used in the companys products. The current stock of genatope is 9,600 kilograms at a book value of 9.60 p per kilogram. If the special order is accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 10.20 p per kilogram. Without the special order, the purchasing manager predicts that the price will be 9.80 p when normal restocking takes place. Any order of genatope must be in the amount of 5,900 kilograms.

What is the relevant cost of genatope?

Identify the relevance of each of the figures given in the exercise in terms of making the special-order decision.

Book Value of Inventory

Quantity to be used in special order

Predicted cost if next order is placed early

Predicted cost if next order is placed on time.