Sell the asset, which will drive down the price and cause the expected return to reach the level of the required return.
Answer:
$532,000
Explanation:
The opportunity cost is the cost of the best option rejected.
In this case the option rejected was the investment project that would have returned a total fo 532,000
Therefore, the model 240 should produce a higher profit than 532,000 to reject his project.
The 310 model would have unused capacity as it has more capacity than model 240 but the company will not need to produce as much. So it is discarted from the calculation as it has inefficiency
Answer:
1 ) Variable Overhead Rate Variance = ( SR - AR )* AH
= ( $21 - $20) 3,500
= $3,500 Favorable
2 ) Labor Rate = ( SR - AR )* AH
= ( $24 - $24.9) 2,290
=$2,061 U
Explanation:
TOTAL = Standard cost - Incurred cost
Standard Cost = $70,000 + $4,550
= $74,550
Standard Rate = $74,550 / 3,550
= $21
cost incurred = AR * machine hours
cost per machine hour = $70,000/3,500
=$20
2) Labor Rate = ( SR - AR )* AH
= ( $24 - $24.9) 2,290
=$2,061 U
AR = $57,021/2,290 = $24.9
AR = Actual Rate
SR = Standard Rate
AH = Actual hours
