Question: Bothell Inc. is thinking about producing a special product using an old inventory of part A with a total original cost of $8,000. The special

Bothell Inc. is thinking about producing a special product using an old inventory of part A with a total original cost of $8,000. The special product would use all the inventory of part A. If Bothell were to purchase the same amount of part A on the open market, it would have to pay $9,000. Currently, the inventory of part A is not otherwise useful to Bothell. If it were not used to produce the special product, it could be sold at a discounted price of $7,000 to other parties. Bothell would have to pay a shipping cost of $500 for the sale. What is the relevant cost of the inventory of part A when deciding whether to produce the special product?

Garrison 16e Rechecks 2017-09-13

Multiple Choice

$7,000
$6,500
$9,000
$8,000

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