Suppose Nantucket Nectars has a machine for which it paid $160,000 several years ago and is currently

Question:

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?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...