Bill Pope has developed a new device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis. Bill will rent a garage for $300 per month for production purposes. Utilities will cost $40 per month. Bill has already taken an industrial design course at the local community college to help prepare for this venture. The course cost $300. Bill will rent production equipment at a monthly cost of $800. He estimates the material cost per unit will be $5, and the labor cost will be $3. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays $3,000 per month. Advertising and promotion will cost $900 per month.

Required:

Complete the table by indicating whether the cost fall under a particular type of cost category.

	Opportunity Cost	Sunk Cost	Variable Cost	Fixed Cost	Manufacturing Overhead Cost	Product Cost	Selling Cost	Differential Cost*
Garage rent	(Click to select) Yes No	(Click to select) No Yes	(Click to select) No Yes	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes
Utilities	(Click to select) No Yes	(Click to select) Yes No	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes	(Click to select) Yes No
Cost of the industrial design course	(Click to select) No Yes	(Click to select) No Yes	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes
Equipment rented	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes	(Click to select) No Yes	(Click to select) No Yes
Material cost	(Click to select) Yes No	(Click to select) No Yes	(Click to select) Yes No	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes	(Click to select) Yes No
Labor cost	(Click to select) Yes No	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No
Present salary	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes	(Click to select) No Yes	(Click to select) No Yes	(Click to select) Yes No	(Click to select) Yes No	(Click to select) Yes No
Advertising	(Click to select) Yes No	(Click to select) Yes No	(Click to select) No Yes	(Click to select) No Yes	(Click to select) No Yes	(Click to select) No Yes	(Click to select) Yes No	(Click to select) No Yes

* Between the alternatives of going into business to make the device or not going into business to make the device.