MGAB03H3 Lecture Notes - Lecture 9: Playstation 3, Opportunity Cost
24 Jun 2018
School
Department
Course
Professor
4.43 on final exam (how to answer this type of question)
Take the special order
Benefits form special order:
Incremental sales
$435
Incremental VC
$ (305)
a.
Incremental CM
$130 x 4800=$624000.00
b.
Incremental FC
(62000)
Incremental OI
$56200
c.
1)
Cost of losing PS3
Loss of sales
$(480)
Cost savings VC
340
Loss of CM
$(140) x 4200=
588,000
Cost savings on FC
52500
Total loss on Sale of
PS3
($535,500)
a.
2)
Additional Opportunity costs ?
$0
3)
No opportunity cost because
PS3= 8hrs x 4200=4200 33600 hrs is the same as special order
7hrs x 4800=33600 hrs
NET BENEFIT (COST) OF TAKING
SPECIAL ORDER:
$2650
0
PS1 PS3 PS2
(1) (2)
28800 hrs 33600 hrs
If the special order takes
less time and thus will
give you more time to
make other products, then
you have positive
contribution margin from
PS2 because you can
more
If the special order takes
more time, and eats into
PS3 and PS2 than you
have an opportunity cost
E.g Opportunity cost:
Special order needs less time: 1200hrs1)
PS2 1200 hrs/ 12 hrs= 100 units
100 units x $180=$18000 + positive
Special order needs more time: 2400hrs2)
(2400hrs) / 12 hrs = (200) unit
PS2 (200 units) x $180 = -36000 Negative
Lecture 9 - Chapter 4 continued
Tuesday, June 5, 2018
3:22 PM
