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Bears, Inc. acquired a Windy City machine for $80,000 earlier this year. The machine proved inadequate for Bears, Inc. production needs (i.e., 60,000 units per
Bears, Inc. acquired a Windy City machine for $80,000 earlier this year. The machine proved inadequate for Bears, Inc. production needs (i.e., 60,000 units per quarter). Two possible replacement machines are being investigated: Bears, Inc. has a contingency fund of $250,000 set aside for unexpected spending. $125,000 of the contingency fund was earmarked as a hedge (or cushion) in case of a shutdown caused by a natural disaster while the other $125,000 was designated for any "just in case" situation occurring during the year. A decision has been reached - Bears Inc, will acquire the Mitch Machine. While considering the above decision, Bears, Inc. management examined (and rejected) the possibility of selling the Windy City machine for $10,000. Instead they will donate the machine to a local school for use in their vocational training. Determine the total differential costs tied to the decision to buy the Mitch Machine instead of the Patrick Machine. Determine the total sunk cost of the decision to buy the Mitch Machine instead of the Patrick Machine. Determine the opportunity cost of the decision to buy the Mitch Machine
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