Question - International Chemical Company's special order also requires 1 000 kilograms of genatope, a solid chemical regularly used in the company's products. The current stock of genatope is 8 000 kilograms at a carrying amount of $16.20 per kilogram. If the special order is accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of $17.40 per kilogram. Without the special order, the purchasing manager predicts that the price will be $16.60 when normal restocking takes place. The order size for genatope is 5 000 kilograms.
1. What is the relevant cost of genatope?
2. Discuss each item of numerical data detailed in this exercise in terms of its relevance to the decision?