Question: Suppose Nantucket Nectars has a machine for which it paid
Suppose Nantucket Nectars has a machine for which it paid $160,000 several years ago and is currently not being used. It can use the machine to produce 12 oz. bottles of its juice cocktails or 12 oz. bottles of its 100% juices. The contribution margin from the additional sales of 100% juices would be $90,000. A third alternative is selling the machine for cash of $75,000. What is the opportunity cost of the machine when we analyze the alternative to produce 12 oz. bottles of juice cocktails?
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