Reference no: EM132472691

Point 1: Briquette Corporation has stock in 35,800 kilograms of material L that is bought five years ago for $5.55 per kilogram. This raw material was purchased to use in a product line that ha been discontinued. Material L can be sold as is for scrap for $1.67 per kilogram. An alternative would be to use material L in one of the company's current products, Q08C, which currently requires 2 kilograms of raw material that is available for $9.15 per kilogram. material L can be modified at a cost of $0.78 per kilogram so that it can be used as a substitute for this material in the production of product Q08C.

Point 2: However, after modification, kilograms of material L is required for every unit of product Q08C that is produced. Briquette Corporation has now received a request for a company that could use material in its production process. Assuming that Briquette Corporation could use all of its stock of material L in its product Q08C or the company could sell all of its stock of the material at the current scrap price of $1.67 per kilogram.

Question 1: What is the minimum acceptable selling price of material L to the company that could use material L in its own production process.