At the same time, as the Chief Operating Officer (COO) of this company, Bennett gave an alternative
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Question:
At the same time, as the Chief Operating Officer (COO) of this company, Bennett gave an alternative for machine procurement, in which:
Investment in machine purchasing is $1,000,000;
Selling price of each unit is $5;
Cost of raw material is $2 per unit;
Packaging cost is $0.5 per unit;
Annual labor cost is $200,000;
Annual expenses for machine maintenance is $200,000;
This machines can be used for 8 years;
The salvage value (market value) after 8 years is $25,000.
(5)What is the definition of opportunity cost? Will choosing Bennett’s proposal have an opportunity cost? [5 marks]
Related Book For
Business
ISBN: 978-0324829556
10th Edition
Authors: Willian M Pride, Robert J. Hughes, Jack R Kapoor
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