How is the opportunity cost calculated?
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A company can make any one of the 3 products X,Y or Z in a year. It can exercise its option only at the beginning of each year. |
X Y Z
SP PER UNIT 10 12 12
VARIABLE COST 6 9 7
MARKET DEMAND(UNITS) 3000 2000 1000
PRODUCTION CAPACITY(UNITS) 2000 3000 900
FIXED COST 30000
You are required to compute the opportunity costs for each of the products.
Answer is 6000 8000 8000 for x y and z
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