Sigma Limited has 500 kg of material X in stock for which it paid Rs. 2,000....

 

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Sigma Limited has 500 kg of material X in stock for which it paid Rs. 2,000. The material is no longer in use in the company and could be sold for Rs. 1.50 per kg. Sigma Limited is considering taking on a single special order which will require 800 Kg of material X. the current purchase price of material K is Rs. 5 per Kg. In the assessment of relevant cost of the decision to accept the special order, the cost of existing material X is (a) A sunk cost of Rs. 2,000. (b) A sunk cost of Rs. 2,000 and an incremental cost of Rs. 1,500. (c) An opportunity cost of Rs. 750 and an incremental cost of Rs. 1,500. (d) An incremental cost of Rs. 4,000. Sigma Limited has 500 kg of material X in stock for which it paid Rs. 2,000. The material is no longer in use in the company and could be sold for Rs. 1.50 per kg. Sigma Limited is considering taking on a single special order which will require 800 Kg of material X. the current purchase price of material K is Rs. 5 per Kg. In the assessment of relevant cost of the decision to accept the special order, the cost of existing material X is (a) A sunk cost of Rs. 2,000. (b) A sunk cost of Rs. 2,000 and an incremental cost of Rs. 1,500. (c) An opportunity cost of Rs. 750 and an incremental cost of Rs. 1,500. (d) An incremental cost of Rs. 4,000.

Answer rating: 100% (QA)

a sunk cost of Rs 2000 This is because the cost has already been incurred and cannot be changed It i... View the full answer