Simmons Skates produces several products that are sold by toy shops across the country. Production of one

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Simmons Skates produces several products that are sold by toy shops across the country. Production of one product, long-board skates, uses all available machine hours on machine 24B. The skate, which provides a contribution margin of \(\$ 4.80\) per unit, requires 0.10 machine hours per unit to produce. Simmons Skate would like to use machine \(24 \mathrm{~B}\) in the production of other products. This production would take about 250 hours.

Required:

Calculate the opportunity cost of using 250 machine hours on machine 24B for other production. If you were a manager at Simmons Skates, how would you use the opportunity cost that you calculated?

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Accounting Information For Business Decisions

ISBN: 9780170253703

2nd Edition

Authors: Billie Cunningham, Loren A. Nikolai, John Bazley, Marie Kavanagh, Geoff Slaughter, Sharelle Simmons

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