Find the opportunity cost for input into the decision process

The directors of Darlene Fabrik are considering whether or not to start up a new production process. The process would use a machine that is no longer required for the purpose for which it was originally bought. It cost €45 000 four years ago, and accumulated depreciation at the decision date was €13 000. Similar machines of the same age can be sold for €38 000. The same model of machine would now cost €50 000 if purchased new.

What is the amount of the opportunity cost for input into the decision process?

For each of the following types of business, list at least two fixed and two variable costs that

might typically be incurred:

● milk delivery business

● coffee bar

● stationery manufacturer

● cross channel ferry operator.

Try not to repeat the same examples of costs for the different businesses.

Solution: