Purchase Solution

Opportunity Cost

Not what you're looking for?

Ask Custom Question

Drop a Product/Opportunity Cost

Midwestsern Sod Company produces two products: Fescue Grass and Bermuda Grass
Bermuda Grass Fescue Grass

Selling price per square yard $1.90 $2.65

Less variable cost per square yard .40 1.00
(water, fertilizer, maintenance)

The company has 100,000 square yards of growing space available. In the past year, the company dedicated 50,000 square yards to Fescue and 50,000 square yards to Bermuda grass. Annual fixed costs are $120,000, which the company allocates to products base on relative growing space.

Martha Lopez, the chief financial officer of Midwestern Sod, has suggested that in the coming year, all 100,000 square yards should be devoted to Bermuda grass. The president vetoed her suggestion saying "I know that right now home construction is booming in our area, and we can sell all the grass we can produce, irrespective of what type. But, you know a lost of developers really like the Fescue grass and I'd hate to disappoint them by not offering it."

What is the opportunity cost of the president's decision to stick with both types of grass?

Purchase this Solution
Solution Summary

Opportunity cost is investigated. The solution is detailed and well presented.

Solution Preview

Please see the attached file for the complete solution.

Drop a Product/Opportunity Cost

Midwestsern Sod Company produces two products: Fescue Grass and Bermuda Grass

Fescue Grass Bermuda Grass

Selling price per square yard $1.90 $2.65

Less variable cost per square yard .40 1.00
(water, ...

Purchase this Solution
Free BrainMass Quizzes
Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

View More Free Quizzes
Related BrainMass Solutions

  • Opportunity cost

    Opportunity cost is emphasized.

  • Opportunity costs - fixed or variable?

    Next you need to evaluate the opportunity cost associated with the organization and decide if those opportunity cost are fixed, variable, both, or neither. What are opportunity costs? Determine if the costs are variable, fixed, both, or neither.

  • Opportunity Cost

    239266 Opportunity Cost Define the term "opportunity cost."

  • Macroeconomics: Opportunity cost

    Number of alternatives: 2 ($500 work at home, - $800 Costa Rica trip) Cost of selected Alternative = -$800 Cost of Next Best Alternative = $500 Opportunity Cost = Cost of Selected Alternative - Cost of Next Best Alternative Opportunity Cost

  • Opportunity cost

    The opportunity cost of going to the movie is studying for the test. b. The opportunity cost of going to the party is the movie. c. The opportunity cost of going to the party is both the movie and the study time. d.

  • Economic profit and opportunity costs

    Opportunity cost The opportunity cost or alternative costs are the returns from the second best use of the organization's resources or here in this case the individual's capability.

  • Business help: Opportunity cost

    Which one of the following is an example of an opportunity cost 1.

  • Opportunity cost & make or buy decisions

    466845 Opportunity Cost & Make or Buy Decisions How does opportunity cost enter into the make or buy decision? What would be an example of a decision that you might make in your personal life that would involve an opportunity cost?

  • Opportunity Cost Illustrated

    42443 Opportunity Cost and Alternative Choices We make choices as consumers every day. Opportunity cost is defined as a person's ''next best alternative'' or ''the cost of what you give up" when you make a choice.

  • Out of Pocket

    Therefore the opportunity cost of a quintal of wheat is the amount of output of potatoes given up.

View More Related Solutions