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Opportunity Cost Analysis

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RLJ Technologies provides custom servics to its loyalty customers from Monday through Friday. David Lee, the co-owner, believes it is important for the 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. David estimates that if the company stays open on Saturday, it can generate revenue of $2500 each day for 52 days per year. The incremental daily costs will be $500 for labor, $50 for transportation, and $150 for an office manager. The costs do not include a portion of monthly rent. David would like to know the opportunity cost of not working on Saturday. Provide an estimate of the opportunity cost, and explain why you do not have to consider in your estimate.

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Solution discusses and give the steps of computing Opportunity Cost Analysis

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Preparing an Opportunity Cost Analysis

RLJ Technologies provides custom servics to its loyalty customers from Monday through Friday. David Lee, the co-owner, believes it is important for the 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. ...

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