What is the opportunity cost of the president decision

Reference no: EM13300223

Fescue grass: $2.00 selling price per square yard, less .55 variable cost per square yd.

Bermuda grass: $2.85 selling price per square yard, less 1.15 variable cost per sq. yd

The company has 120,000 sq. yds of growing space available. In the past year, they dedicated 60,000 sq. yds to fescue and 60,000 sa yds to Bermuda grass. Annual fixed costs are $120,000, which the company allocates to products based on growing space.

The chief financial officer suggested that in the coming year all 120,000 sq yds should be devoted to Bermuda grass.

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

Reference no: EM13300223

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