Khaled has developed a new technology device that is so exciting he is considering quitting his...

  

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Khaled has developed a new technology device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis. Khaled will rent a small factory for 1,000dhs per month for production purposes. Utilities will cost 500dhs per month. Khaled has already taken an industrial design course at Dubai Men's College to help prepare for this venture. The course cost 800dhs. Khaled will rent production equipment at a monthly cost of 3,000dhs. He estimates the material cost per unit will be 20dhs, and the labor cost will be 12dhs. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays 25,000dhs per month. Advertising and promotion will cost 3,500dhs per month. Required: Complete the chart below by placing an "X" under each heading that helps to identify the cost involved. There can be "X's" placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost and a fixed cost; there would be an "X" placed under each of these headings opposite the cost. Small factory rent Utilities Cost of Industrial Design Course Equipment rent Material Cost Labour Cost Advertising Current Salary * Between the alternatives of going into business to make the device or not going into business to make the device. Khaled has developed a new technology device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis. Khaled will rent a small factory for 1,000dhs per month for production purposes. Utilities will cost 500dhs per month. Khaled has already taken an industrial design course at Dubai Men's College to help prepare for this venture. The course cost 800dhs. Khaled will rent production equipment at a monthly cost of 3,000dhs. He estimates the material cost per unit will be 20dhs, and the labor cost will be 12dhs. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays 25,000dhs per month. Advertising and promotion will cost 3,500dhs per month. Required: Complete the chart below by placing an "X" under each heading that helps to identify the cost involved. There can be "X's" placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost and a fixed cost; there would be an "X" placed under each of these headings opposite the cost. Small factory rent Utilities Cost of Industrial Design Course Equipment rent Material Cost Labour Cost Advertising Current Salary * Between the alternatives of going into business to make the device or not going into business to make the device.

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Differential Cost Fixed Cost Manufacturing Overhead Cost Opportunity Cost Direct ... View the full answer