Milford Corporation Has in Stock 16,100 Kilograms of Material R

Milford Corporation has in stock 16,100 kilograms of material R that it bought five years ago for $5.75 per kilogram.This raw material was purchased to use in a product line that has been discontinued.Material R can be sold as is for scrap for $3.91 per kilogram.An alternative would be to use material R in one of the company's current products,S88Y,which currently requires 2 kilograms of a raw material that is available for $7.60 per kilogram.Material R can be modified at a cost of $0.77 per kilogram so that it can be used as a substitute for this material in the production of product S88Y.However,after modification,4 kilograms of material R is required for every unit of product S88Y that is produced.Milford Corporation has now received a request from a company that could use material R in its production process.Assuming that Milford Corporation could use all of its stock of material R to make product S88Y or the company could sell all of its stock of the material at the current scrap price of $3.91 per kilogram,what is the minimum acceptable selling price of material R to the company that could use material R in its own production process?

A) $0.88 per kg
B) $3.03 per kg
C) $4.57 per kg
D) $3.91 per kg