Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $15 per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison? OA. Relevant costs: benefits: $2 x 40 hours; uniforms: $10 x 2 shirts. Relevant revenues: None. Sunk costs: $4,000 for software. Opportunity costs: $4,000. OB. Relevant costs: benefits: $10 x 40 hours; uniforms: $2 x 2 shirts. Relevant revenues: Cannot be determined. Sunk costs: None. Opportunity costs: None. OC. Relevant costs: benefits: $2 x 40 hours; uniforms: $10 x 2 shirts. Relevant revenues: None. Sunk costs: $4,000 for software. Opportunity costs: None. OD. Relevant costs: benefits: $10 x 40 hours; uniforms: $2 x 2 shirts. Relevant revenues: Cannot be determined. Sunk costs: None. Opportunity costs: $4,000.
Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $15 per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison? OA. Relevant costs: benefits: $2 x 40 hours; uniforms: $10 x 2 shirts. Relevant revenues: None. Sunk costs: $4,000 for software. Opportunity costs: $4,000. OB. Relevant costs: benefits: $10 x 40 hours; uniforms: $2 x 2 shirts. Relevant revenues: Cannot be determined. Sunk costs: None. Opportunity costs: None. OC. Relevant costs: benefits: $2 x 40 hours; uniforms: $10 x 2 shirts. Relevant revenues: None. Sunk costs: $4,000 for software. Opportunity costs: None. OD. Relevant costs: benefits: $10 x 40 hours; uniforms: $2 x 2 shirts. Relevant revenues: Cannot be determined. Sunk costs: None. Opportunity costs: $4,000.
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter10: Spreadsheet Models
Section: Chapter Questions
Problem 5P: Consider again the scenario described in Problem 4.
The Center for Business Analytics is considering...
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