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A company is considering a short-term pricing decision to utilise some spare capacity. The item...

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Accounting

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A company is considering a short-term pricing decision to utilise some spare capacity. The item to be manufactured and sold would use 1,500 kgs of raw material Q. Material Q is in regular use by the company. It currently has 1,000 kgs in inventory, which was purchased last month at a cost of $4 per kg. The current replacement cost of material Q is $4.80 per kg and the current inventory could be sold for $4.30 per kg. Calculate the relevant cost of material Q for the purposes of this decision

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