Question: X Ltd. has been approached by a customer who would like a special jobto be done for him and is willing to pay ` 22,000

X Ltd. has been approached by a customer who would like a special jobto be done for him and is willing to pay ` 22,000 for it. The job would require the following materials : Material Total units Units already Book value of units in Realisable Replacement required in stock stock value cost `/unit `/units `/units A 1,000 0 - - 6 B 1,000 600 2 2.5 5 C 1,000 700 3 2.5 4 D 200 200 4 6 9 (i) Material B is used regularly by X Ltd. and if stocks are required for this job, they would need to be replaced to meet other production demand. (ii) Materials C and D are in stocks as the result of previous excess purchase and they have a restricted use. No other use could be found for material C but material D could be used in) another job as substitute for 300 unit of material E which currently cost ` 5 per unit of ( of which the company has no units in stock at the moment). What are the relevant costs of material, in deciding whether or not to accept the contract? Assume all other expenses on this contract to be specially incurred besides the relevant cost of material is ` 550.

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