Purchase Solution

Opportunity cost

Not what you're looking for?

Ask Custom Question

Regarding that question we have been doing:

It says that expected revenue is going to be $80 or $120 differential a day for the proposed unit....This is incremental revenue I take it. Should I also be including the $120 regular room charge in my calculation?

The reason I ask is because our lecturer told us we don't need to include irrelevant costs! I included it so that I got an accurate figure for the 10% allowance for bad debts and insurance discount....

Maybe I should be applying that "bad debts and insurance discount" to the cardiac care room rate also but it does not stipulate that directly?

And finally, based on the Return on investment percentage and the differential margins, what would your recommendation be based on financials and based on qualitative information?

Attachments
Purchase this Solution
Solution Preview

Surely the $120 regular room charge should be included in calculating the total revenue from the proposed telemetry unit. Because this is the basic income from the project, which varies with the utilization rate.
<br>
<br>Irrelevant costs should be taken away of course. But those items stated in the question ...

Purchase this Solution
Free BrainMass Quizzes
MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Lean your Process

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

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

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.

  • cost of capital,its components

    Why would the cost of capital be considered an opportunity cost? 2. Why is the cost of capital measured on an after-tax basis? Would this affect any specific cost components? Why would the cost of capital be considered an opportunity cost?

View More Related Solutions