Apple is deciding whether to produce or outsource the screen from their series 8 Apple Watch. Apple
Question:
Apple is deciding whether to produce or outsource the screen from their series 8 Apple Watch. Apple can buy 10,000 screens at $6.75/unit.
If Apple purchases the screen, they could eliminate $28,000 of fixed cost and all of the variable costs related to production the screen of $75,000. Additionally, if Apple outsources production of the screen, they can use the extra capacity to generate an additional $37,000 of income. Which alternative has an opportunity cost, and for how much?
O There is an opportunity cost of $37,000 if they outsource production of the screen.
O There is an opportunity cost of $37,000 for Apple if they continue to produce the screen.
O There is an opportunity cost of $67,500 for Apple if they continue to produce the screen.
O There is an opportunity cost of $67,500 if they outsource production of the screen.
O There are no opportunity costs for Apple to consider
