Bill Pope Has Developed a New Device That Is So

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 will be $5 per unit,and the labour cost will be $3 per unit.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 chart below by placing an "X" under each heading that helps to identify the cost involved.You can place an "X" under more than one heading for a single cost: for example,a cost may be a sunk cost,an overhead cost,and a product cost; you would place an "X" under each of these headings opposite the cost.
* Between the alternatives of going into business to make the device or not going into business to make the device.See columnheading "Differential Cost".
$\begin{array}{|l|l|l|l|l|l|l|l|l|}\hline& \begin{array}{l}\text { Opportunity }\\\text { Cost }\end{array} & \begin{array}{l}\text { Sunk } \\\text { Cost }\end{array} & \begin{array}{l}\text { Variable } \\\text { Cost }\end{array} & \begin{array}{l}\text { Fixed } \\\text { Cost }\end{array} & \begin{array}{l}\text { Mfg. } \\\text { Overhead }\end{array} & \begin{array}{l}\text { Product } \\\text { Cost }\end{array} & \begin{array}{l}\text { Selling } \\\text { Cost }\end{array} & \begin{array}{l}\text { Differential } \\\text { Cost }\end{array} \\\hline \text { Garage rent } \\\hline \text { Utilities } \\\hline \text { Cost of the }\\\text { industrial }\\\text { design course }\\\hline\text { Equipment }\\\text { rented }\\\hline \text { Material cost } \\\hline \text { Labour cost } \\\hline \text { Present salary } \\\hline \text { Advertising } \\\hline\end{array}$

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