Status QUESTION An opportunity cost O should be initially re

Status: QUESTION An opportunity cost O should be initially recorded as an asset O is the cost of a new product proposal Ois the potential benelft that may be obtained by following an altermative course of action Ois classified as manufacturing overhead QUESTION 7 Darien JustICE has a process that results in 24,000 bags of Cicle-2 that can be sold for $8 per bag. An altemative would be to process Cicle-2 further at a cost of $160,000 and then sell it for $14 per bag. Should management sell Cicle-2 now or effect of the action? should Cicle-21 be processed further and then sold? What is the Process further, the company will be better off by $16,000 Sell now, the company will be better off by $16,000 Process further, the company will be better off by $144,000 Sell now, the company will be better off by $160,000 QUESTION

Solution

Answer:

Question 6 :is the potential benefit that may be obtained by following an alternative course of action

Question 7:

Marginal revenue:

$14 - $8 = $6 × 24,000 = $144,000

Marginal cost:

$160,000

$144,000 -$160,000 = ($16,000) -> Sell now