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Shortt Company has been approached by a customer who is offering a one-time-only special order to buy 4,000 units of a customer- designed part. Each one of these parts requires 4 units of raw material A10 and 4 units of raw material C70. Data concerning these twe raw materials follow: A10 C70 Units in Raw Materials: Inventory 1,800 Raw Materials Inventory $ 5.50 Cost Per Unit in Current Market Disposal Value $ 6.00 Per Unit $ 2.00 $ 2.50 14,000 Price Per Unit $ 6.50* $ 7.00 The current market price per unit mentioned above reflects the prices currently charged by Shortt Company's raw materials supplier. The disposal value per unit mentioned above reflects the price that a recycling company would pay Shortt to purchase any unused raw materials that it wishes to liquidate. Material A10 is used by many of the company's products and is routinely replaced. Material C70 is no longer used by the company in any of its normal products. Required: 1. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? 2. Assume that A10 and C70 are both no longer used in any of the company's normal products. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Relevant cost of raw materials

Shortt Company has been approached by a customer who is offering a one-time-only special order to buy 4,000 units of a customer- designed part. Each one of these parts requires 4 units of raw material A10 and 4 units of raw material C70. Data concerning these twe raw materials follow: A10 C70 Units in Raw Materials: Inventory 1,800 Raw Materials Inventory $ 5.50 Cost Per Unit in Current Market Disposal Value $ 6.00 Per Unit $ 2.00 $ 2.50 14,000 Price Per Unit $ 6.50* $ 7.00 The current market price per unit mentioned above reflects the prices currently charged by Shortt Company's raw materials supplier. The disposal value per unit mentioned above reflects the price that a recycling company would pay Shortt to purchase any unused raw materials that it wishes to liquidate. Material A10 is used by many of the company's products and is routinely replaced. Material C70 is no longer used by the company in any of its normal products. Required: 1. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? 2. Assume that A10 and C70 are both no longer used in any of the company's normal products. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Relevant cost of raw materials

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...
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Shortt Company has been approached by a customer who is offering a one-time-only special order to buy 4,000 units of a customer- designed part. Each one of these parts requires 4 units of raw material A10 and 4 units of raw material C70. Data concerning these twe raw materials follow: A10 C70 Units in Raw Materials: Inventory 1,800 Raw Materials Inventory $ 5.50 Cost Per Unit in Current Market Disposal Value $ 6.00 Per Unit $ 2.00 $ 2.50 14,000 Price Per Unit $ 6.50* $ 7.00 The current market price per unit mentioned above reflects the prices currently charged by Shortt Company's raw materials supplier. The disposal value per unit mentioned above reflects the price that a recycling company would pay Shortt to purchase any unused raw materials that it wishes to liquidate. Material A10 is used by many of the company's products and is routinely replaced. Material C70 is no longer used by the company in any of its normal products. Required: 1. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? 2. Assume that A10 and C70 are both no longer used in any of the company's normal products. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Relevant cost of raw materials <Required 1 Required 2 >
Transcribed Image Text:Shortt Company has been approached by a customer who is offering a one-time-only special order to buy 4,000 units of a customer- designed part. Each one of these parts requires 4 units of raw material A10 and 4 units of raw material C70. Data concerning these twe raw materials follow: A10 C70 Units in Raw Materials: Inventory 1,800 Raw Materials Inventory $ 5.50 Cost Per Unit in Current Market Disposal Value $ 6.00 Per Unit $ 2.00 $ 2.50 14,000 Price Per Unit $ 6.50* $ 7.00 The current market price per unit mentioned above reflects the prices currently charged by Shortt Company's raw materials supplier. The disposal value per unit mentioned above reflects the price that a recycling company would pay Shortt to purchase any unused raw materials that it wishes to liquidate. Material A10 is used by many of the company's products and is routinely replaced. Material C70 is no longer used by the company in any of its normal products. Required: 1. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? 2. Assume that A10 and C70 are both no longer used in any of the company's normal products. What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the relevant cost of the raw materials that the company should include in its analysis when deciding whether to accept or reject the special order? Relevant cost of raw materials <Required 1 Required 2 >
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