EXTRA MARK: You have learned in class that we look to costs to make good decisions. If the cost to manufacture a product in-house is $10 while to outsource the same product the cost would be $12, then the good decision is to produce it in-house. The opportunity cost in this case is $2 (i.e., the difference between the two alternatives). This question requires critical thinking, no so much accounting knowledge. Equipment owned by a company has a net book value of $1,800 and has been idle for some months. It could be used on a six-month contract, which would provide a contribution of $4,000 to profits. If not used on this contract, the equipment would be sold now for a net amount of $2,000. Disregard the time value of money. What is the opportunity cost in this case? a. $200 b. $1,200 c. $2,000 d. $2,200 e. $3,800