Question: 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

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
You have been requested to prepare a financial analysis of the special order from Stay Clean Ltd. Given that 1000 litres of Alpha A are required in production of this order what is the relevant cost of Alpha A to be included in the analysis?

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Solution A financial analysis of the special order from Stay Clean Ltd is as follows i Identify rele... View full answer

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