Hannah Sdn. Bhd. has been offered a contract worth RM40,000. This would require the following materials:...

Transcribed Image Text:

Hannah Sdn. Bhd. has been offered a contract worth RM40,000. This would require the following materials: Material P: 1,200 kgs Material Q: 800 kgs Material R: 900 kgs Material P is used continuously by the company. Current stock is 1,000 kg at a book value of RM7 per kg but it is known that future purchases will cost RM8 per kg. A stock of 1,000 kg Material Q is currently held. The original cost of this material was RM7 per kg. As the material has not been in use for the last two years, it has been written down to RM4 per kg scrap value. However, it could be used as a substitute for Material S, another material commonly used on other jobs. The current price of Material S is RM4.50 per kg. The current stock of Material R is due to previous over buying and has no other use. Material R can be used for the contract or disposed of at a cost of RM1,000. Current stock is 900kg at a book value of RM5 per kg. Required: Determine the relevant cost of materials P, Q and R and the total relevant cost of materials for the contract. Your answer must be supported by detailed explanation of the figures used. Hannah Sdn. Bhd. has been offered a contract worth RM40,000. This would require the following materials: Material P: 1,200 kgs Material Q: 800 kgs Material R: 900 kgs Material P is used continuously by the company. Current stock is 1,000 kg at a book value of RM7 per kg but it is known that future purchases will cost RM8 per kg. A stock of 1,000 kg Material Q is currently held. The original cost of this material was RM7 per kg. As the material has not been in use for the last two years, it has been written down to RM4 per kg scrap value. However, it could be used as a substitute for Material S, another material commonly used on other jobs. The current price of Material S is RM4.50 per kg. The current stock of Material R is due to previous over buying and has no other use. Material R can be used for the contract or disposed of at a cost of RM1,000. Current stock is 900kg at a book value of RM5 per kg. Required: Determine the relevant cost of materials P, Q and R and the total relevant cost of materials for the contract. Your answer must be supported by detailed explanation of the figures used.

Answer rating: 100% (QA)

To calculate the relevant cost of materials P Q and R as well as the total relevant cost for the con... View the full answer