Magic Dusters has also identified that another ingredient Delta D (500 litres required) will also be used in the special order for Stay Clean Ltd, (see problem 10.46). Unlike Alpha A, Delta D is currently used in the production of the normal production for Magic. The current inventory of Delta D was purchased at a cost of $20 per litre. The replacement cost is $22 if ordered in the normal schedule; however, if a rush order is required the cost will be $25. Another requirement of the supplier of Delta D is that the minimum order is 1000 litres.

Data from Problem 10.46

Magic Dusters is considering a special order from Stay Clean Ltd for a special cleaning product for windows. One ingredient required for the product is Alpha A which Magic Dusters has in its inventory. Magic Dusters current products do not use Alpha A; however, it was an ingredient in one of Magic’s discontinued product lines. Alpha A was purchased at a cost of $10 per litre, and could be currently sold for $5 per litre, with a replacement cost of $12 per litre.

Required
Analyse the cost to be included for Delta D in the following circumstances:
a. Sufficient inventory of Delta D available to meet order without impacting normal production.
b. Requirement to make a rush order for Delta D to satisfy the special order.