# More Simple Relevant Costs Questions Or Examples

Below are simple examples on relevant costs for readers to practice to understand relevant costs.

Question No:1

ABC Ltd wishes to know the relevant cost of material X for a special contract. The contract will need 200 litres of Q.

 Currently in stock 150 litres Original cost of Q in stock \$2 per litre Current purchase price of Q \$4 per litre

If not used on the contract stocks of Q would be scrapped for proceeds of \$1 per litre

Relevant costs:-

Cost of purchasing 50 litres of Q=(50x\$4) =\$200 plus Opportunity cost of scrap(150 litres x\$1)   =\$150 =\$350

Question No.2:

ABC Ltd requires 400kg of material D for a job it is about to start. 300 kgs are currently in stock which cost \$5 per kilogram three months ago. The current purchase price of material D is \$4 per kilogram. If the material D that the company currently holds is not used in the job in question it will be scrapped a cost of \$0.50 per kilo gram. What is the relevant cost of the 400 kgs of material D?