Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Opportunity Costs [LO 2] Parrish Plumbing provides plumbing services to residential customers from Monday through Friday. Ken Parrish, the owner, believes that it is important

image text in transcribed

Opportunity Costs [LO 2] Parrish Plumbing provides plumbing services to residential customers from Monday through Friday. Ken Parrish, the owner, believes that it is important for his employees to have Saturday and Sunday off to spend with their families. However, he also recognizes that this policy has implications for profitability, and he is considering staying open on Saturday. Ken estimates that if his company stays open on Saturday, it can generate $2,500 of daily revenue each day for 52 days per year. The incremental daily costs will be S700 for labor, S500 for parts, $100 for transportation, and $200 for office staff. These costs do not include a share of monthly rent or a share of depreciation related to office equipment. Ken is determined not to have employees work on Sunday, but he would like to know the opportunity cost of not working on Saturday. Provide Ken with an estimate of the opportunity-cost, and explain why you do not have to consider rent or depreciation of office equipment in your estimate

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Employee Motivation Audit

Authors: Jane Weightman

1st Edition

0955970709, 978-0955970702

More Books

Students also viewed these Accounting questions