What is the real cost of endor if special order is produced

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The special order will require 800 gallons of endor, a highly perishable material that is purchased as needed. Alderon currently has 1,200 gallons of endor on hand, since the material is used in virtually all of the company's products. The last time endor was purchased, Alderon paid $5.00 per gallon. However, the average price paid for the endor in stock was only $4.75.

  • The market price for endor is quite volatile, with the current price at $5.50. If the special order is accepted, Alderon will have to place a new order next week to replace the 800 gallons of endor used. By then the price is expected to reach $5.75 per gallon.

Question i. What is the real cost of endor if the special order is produced?

Reference no: EM132502262

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