A computer manufacturer is deciding whether to produce a large monitor with a thin screen. One of the managers suggested that the incremental costs for this line of manufacturing will be primarily variable because the company currently has a lot of idle capacity.
A. What is the cost object in this decision?
B. Is the accounting system likely to have the information needed to develop a cost function?
C. What might be an appropriate estimation technique for this cost? Explain.
D. What is the opportunity cost for using this idle capacity? Explain.