Super Printing Sdn. Bhd. (SPSB) intends to use relevant costs as the basis of the selling price for a special order; the printing of a mini wall calendar. The mini wall calendar requires a particular type of paper that is not regularly used by SPSB although a limited amount is in SPSBs inventory which was left over from a previous job. The cost when SPSB bought this paper last year was RM30 per ream and there are 200 reams in inventory. The mini wall calendar requires 500 reams. The current market price of the paper is RM52 per ream and the resale value of the paper in inventory is RM20 per ream.

Required:

(a) Calculate the relevant cost of the paper to be used in printing the mini wall calendar.

(6 marks)

(b) Distinguish between relevant and irrelevant costs.

(4 marks)

[10 marks]