Managerial Accounting

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?

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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.

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