Answer the following question(s)using the information below.Central Medical Supply Inc., a manufacturer of medical testing equipment, has $240,000 worth of an obsolete line of testing equipment.The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $64,000; the market value would then be $136,000.However, Tripac offered to purchase the obsolete equipment as is for $88,000.
-What is the opportunity cost associated with the adaptation of the equipment to another line of testing equipment assuming Central accepts Tripac's offer?
A)$72,000
B)$88,000
C)$63,000
D)$240,000
E)none of the above

Question

Quizplus · Accepted Answer

The opportunity cost is the difference between the market value after adaptation ($136,000) and the offer from Tripac ($88,000), which is $48,000. However, since the adaptation cost is $64,000, the net opportunity cost is $72,000 ($136,000 - $64,000 - $88,000).

Answer the Following Question(s)using the Information Below