A supplier offers to make Part A for $30. Altec Services Corporation has relevant costs of $47 a unit to manufacture 1,020 units of Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is ________.
A) $0
B) $47,940
C) $30,600
D) $78,540

Question

Quizplus · Accepted Answer

The opportunity cost is $0 as there is excess capacity. They will not forgo any profit they can make on other products if they making and selling any other products.

A Supplier Offers to Make Part a for $30