There are costs that the company profit have been reduce such as the opportunity cost for transferring the other production line that the employee can earn $5000 per month, so there will be $60,000 in the opportunity cost deduct on the company …show more content…
The product price is also changes while the price in the beginning is $300 for a product but after 5 years it’ll decrease by 10% which make the price decline to $270 for one product. From all of that information, the total revenue is calculated by the multiply of the quantity and the selling price (table 2). But, the revenue will be less by the variable operating cost which is 50% of the total revenue and the fixed operating cost which is $600,000 for a year (excluding depreciation) and it’ll come up with the taxable income and there will be a tax deduction which is 30% of the taxable