The Just in Time Company is currently considering a contract which requires the use of two types of materials.

Requirement for contract

Material A

10,000 Kg

Material B

5,000 Kg

5,000 kg of material B was purchased last week at $5 per kg. There only 2,000 kg of this material in store at present which are of no further regular. If not used, these materials will be sold for scrap at $1 per kg. The current purchase cost of material B is $5.50 per kg.

Compute the relevant cost of Material B

Select one:

a. $18,500

b. $25,000

c. $2,000

d. $16,500