• 2 ∗ 100 = 200
o Additional revenue = 200
o Additional costs = 110
1
, • Additional profit = 90 → Accept offer.
C) → What other factors should the company consider before accepting the offer:
• Does it affect the prices in Europe?
• Is there a potential of future deals?
• Is the customer creditworthy → What are the sale terms?
Question 2-3: Opportunity costs (theory)
• Commercial-free radio station → So only revenue is through pledging twice a year.
A) There are opportunity costs involved → These are incurred to the listeners, as they don’t get to
listen to the radio. For the radio station itself these are no costs.
Question 2-5: Opportunity costs (calculations)
• Lease rental payments of H.A. (72,000) > profits from operations (71,000) → You should
lease this department.
o However, consider inventory holding costs and externalities.
▪ Less people may come in the store if they can only buy televisions.
2
,Question 2-9: Negative opportunity costs
Question 2-21: Period/product cost; direct labour/direct material/overhead
• If something is a period cost, it can’t be direct labour/material/overhead costs anymore (as
these are all direct and related to the product).
• Assembly worker wage premium is put with overhead (unlike direct labour like the assembly
line wages), because it is difficult to assign it to one specific product.
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