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Marx produces a mint syrup used by gum and candy companies. Recently, the compary has had excess capacity due to a new competitor entering its
Marx produces a mint syrup used by gum and candy companies. Recently, the compary has had excess capacity due to a new competitor entering its market. Marx is currently bldding on a potential order from Quality Candy for 5,500 cases of syrup. The estimated cost of each case is $25.90, as follows: The predetermined overhead rate is $200 per direct labor dollar. This was estimated by dividing estimated annual overhead ( $1,188,000) by estimated annual direct labor ($660,000). The $1,188,000 of overhead is composed of $297,000 of variable costs and $891,000 of fixed costs. The largest fixed cost relates to depreclation of plant and equipment. (a) With respect to overhead, what is the opportunity cost of producing a case of syrup? (Round answer to 2 decimal places, es. 15.25. Opportunity cost
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