6 Roger is considering undertaking a contract whic...
6 Roger is considering undertaking a contract which will yield income of $15,000 over a 15-month period. To carry out the contract he will have to use 1,000 kg of material. 800 kg is already held in inventory and cost $15 per kg. The current replacement cost is $20 per kg. If not used for the contract the material would be sold to Moore Co for $2,000 in total. Roger could utilise his old machine for the contract if conversion costs of $5,000 are undertaken. Alternatively he could scrap his old machine and receive $3,000 and hire another one at a cost of $500 per month. Labour currently has spare capacity and variable overheads are estimated to be $1 per hour. 2,000 hours are believed to be required for the period of the contract. What is the net relevant cash flow for the contract? (Ignore the time value of money.)
A、$2,000
B、$2,500
C、$4,000
D、$4,500