Limited is an engineering company that owns a non-working machine, which it wants to sell. The machine needs a replacement part before it can be sold. It is possible to buy the part for 687. This would take 9 hours to fit by one of the company's engineers who is paid 18 an hour. At present the company is short of work, but the owners are reluctant to lay off any engineers or even to cut down their basic working week because skilled labour is difficult to find and an upturn in work is expected soon. The company paid 3,000 to buy the machine and without the part it could be sold for an estimated 3,500. What is the minimum price at which the company should sell the machine with the necessary part fitted?

(Complete the necessary drop downs and answer boxes.)

Question content area bottom

Part 1

The minimum price will be:

Minimum price			()
Cost of the part
Cost of the engineer's time
Total

Part 2

What term can be used to describe the estimated sale value of the machine?

A. Historic cost

B.

Irrelevant cost

C.

Opportunity cost

D.

Sunk cost