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is this assessment correct? what would be the interpretation to answer this question? If capacity...

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Accounting

is this assessment correct? what would be the interpretation to answer this question? If capacity for producing the A2B timer component is in fact limited, and therefore each sale of the household timer will eliminate the sale of an A2B component, how would you measure the household timers profitability?

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Estimation of Opportunity Cost In assessing the profitability of the new timer, we take into account the opportunity cost associated with the A2B model. This is because the production line's capacity may be utilized and allocated to the new timer. Our estimation indicates production line's capacity will be dedicated to the new product. Consequently, the opportunity cost is illustrated in Exhibit 8 . Estimation of Opportunity Cost In assessing the profitability of the new timer, we take into account the opportunity cost associated with the A2B model. This is because the production line's capacity may be utilized and allocated to the new timer. Our estimation indicates production line's capacity will be dedicated to the new product. Consequently, the opportunity cost is illustrated in Exhibit 8

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