Stampka Corporation is a specialty component manufacturer with idle capacity.Management would like to use its extra capacity to generate additional profits.A potential customer has offered to buy 4,200 units of component JJF.Each unit of JJF requires 6 units of material O38 and 9 units of material P56.Data concerning these two materials follow: Material O38 is in use in many of the company's products and is routinely replenished.Material P56 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up.

What would be the relevant cost of the materials,in total,for purposes of determining a minimum acceptable price for the order for product JJF?
A)$146,790
B)$199,080
C)$155,610
D)$212,340

Question

Stampka Corporation is a specialty component manufacturer with idle capacity.Management would like to use its extra capacity to generate additional profits.A potential customer has offered to buy 4,200 units of component JJF.Each unit of JJF requires 6 units of material O38 and 9 units of material P56.Data concerning these two materials follow:

Material O38 is in use in many of the company's products and is routinely replenished.Material P56 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up.

What would be the relevant cost of the materials,in total,for purposes of determining a minimum acceptable price for the order for product JJF?

What would be the relevant cost of the materials,in total,for purposes of determining a minimum acceptable price for the order for product JJF?
A)$146,790 
B)$199,080 
C)$155,610 
D)$212,340

Quizplus · Accepted Answer

Materials requirements for O38: 4,200 units of JJF F1F1F1S1F1F1F10 6 units of O38 per unit of JJF = 25,200 units of O38
Materials requirements for P56: 4,200 units of JJF F1F1F1S1F1F1F10 9 units of P56 per unit of JJF = 37,800 units of P56
 11eaa48f_7b14_ca22_9e4a_e561f40caeb6_TB2485_00

Stampka Corporation Is a Specialty Component Manufacturer with Idle Capacity