Altec Services Corporation has relevant costs of $40 per unit to manufacture 1,000 units of Part A.A current supplier offers to make Part A for $35 per unit.Alternatively,the company can rent out the capacity for $25,000.If capacity is constrained,the opportunity cost of buying Part A from the supplier is ________.
A) $0
B) $5,000
C) $35,000
D) $25,000

Question

Quizplus · Accepted Answer

The opportunity cost of buying Part A from the supplier is the income forgone by not renting out the capacity, which is $25,000.

Altec Services Corporation Has Relevant Costs of $40 Per Unit