Janus corporation has in stock 45700 kilograms of material, Ask an Expert

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Janus Corporation has in stock 45,700 kilograms of material L that it bought five years ago for $10.10 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material L can be sold as is for scrap for $3.63 per kilogram. An alternative would be to use material L in one of the company's current products, E99D, which currently requires 2 kilograms of a raw material that is available for $10.45 per kilogram. Material L can be modified at a cost of $1.02 per kilogram so that it can be used as a substitute for this material in the production of product E99D. However, after modification, 3

kilograms of material L is required for every unit of product E99D that is produced. Janus Corporation has now received a request from a company that could use material L in its production process. Assuming that Janus Corporation could use all of its stock of material L to make product E99D or the company could sell all of its stock of the material at the current scrap price of $3.63 per kilogram, what is the minimum acceptable selling price of material L to the company that could use material L in its own production process?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9955584

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