?UU Company has been asked to quote for a special contract. The following information?about the material needed has been given:
?Material X:?
Book value? ? ? ? ? ? ? ? ? ? ? ? ? Scrap value? ? ? ? ? ? ? ? ? ? ? ? ? Replacement cost?
$5.00 per kg? ? ? ? ? ? ? ? ? ? ? ? $0.50 per kg? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$5.50 per kg??
The contract requires 10 kgs of Material X. There are 250 kgs of this material in inventory?which was purchased in error over two years ago. If Material X is modified, at a cost of?$2 per kg, it could then be used as a substitute for material Y which is in regular use and?currently costs $6 per kg.?
What is the relevant cost of the materials for the special contract??