Drop a productopportunity costnbspmidwestern sod company

Assignment Help Cost Accounting

Reference no: EM13355525

Drop a Product/opportunity cost Midwestern Sod Company produces two products: fescue grass and Bermuda grass.

	Fescue Grass	Bermuda Grass
Selling price per square yard	$2.00	$2.85
Less variable cost per square yard (water, fertilizer, maintenance)	0.55	1.15

The company has 120,000 square yards of growing space available. ln the past year, the company dedicated 60,000 square yards to fescue and 60,000 square yards to Bermuda grass. Annual fixed costs are $120,000 which the company allocates to products based on relative growing space.

Martha Lopez, the chief financial officer of Midwestern sod, has suggested that in the coming year, all 120,000 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 lot of developers really like that fescue grass and I'd hate to disappoint them by not offering it."

Required

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

Reference no: EM13355525

Questions Cloud

In summer 2005 time warner inc announced they were setting : in summer 2005 time warner inc. announced they were setting aside 3 billion to settle lawsuits from shareholders who

Cost allocation and apparent profitability diamonds etc : cost allocation and apparent profitability diamonds etc. manufactures jewelry settings and sells them to retail stores.

Activity-based management talbot partners is a consulting : activity-based management talbot partners is a consulting firm with clients across the nation. within the company is a

Make-or-buy decisionnbspcurtis corporation is beginning in : make-or-buy decisionnbspcurtis corporation is beginning in manufacture mighty mint a new mouthwash in a small spray

Drop a productopportunity costnbspmidwestern sod company : drop a productopportunity costnbspmidwestern sod company produces two products fescue grass and bermuda

Rno companys market for the model 55 has changed : rno companys market for the model 55 has changed significantly and rno has had to drop the price per unit from 265 to

Qa company using activity based pricing marks up the direct : qa company using activity based pricing marks up the direct cost of goods by 30 plus charges customers for indirect

Manufacturing overhead is allocated to products based on : manufacturing overhead is allocated to products based on the number of machine hours required. in a year when 20000

The sunrise hotel has 200 rooms each room rents at 110 per : the sunrise hotel has 200 rooms. each room rents at 110 per night and variable costs total 16 per room per night of

User Account

All Pages