O'Reilly has been approached by a customer who would like a special job to be done for him, and who is willing to pay $22,000 for it. The job would require the following materials.

Material Total units Units already Book value of Realisable Replacement

Required in inventory units in inv. Value Cost

$/unit $/unit $/unit

A 1,000 0 - - 6

B 1,000 600 2 2.50 5

C 1,000 700 3 2.50 4

D 200 200 4 6.00 9

Material B is used regularly by O'Reilly, and if units of B are required for this job, they would need to be replaced to meet other production demand.

Materials C and D are in Inventory as the result of previous over-buying, and they have a restricted use. No other use could be found for material C, but the units of material D could be used in another job as substitute for 300 units of material E, which currently costs $5 per unit (of which the company has no units in Inventory at the moment).

Required

Calculate the relevant costs of material for deciding whether or not to accept the contract.