Question

Store | Travel Time Each Way | Price of a Dress |
---|---|---|

(Minutes) | (Dollars per dress) | |

Local Department Store | 15 | 103 |

Across Town | 30 | 85 |

Neighboring City | 60 | 63 |

Juanita makes $16 an hour at work. She has to take time off work to purchase her dress, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.

Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location.

Store | Opportunity Cost of Time | Price of a Dress | Total Cost |
---|---|---|---|

(Dollars) | (Dollars per dress) | (Dollars) | |

Local Department Store | 103 | ||

Across Town | 85 | ||

Neighboring City | 63 |

Assume that Juanita takes opportunity costs and the price of the dress into consideration when she shops. Juanita will minimize the cost of the dress if she buys it from the .

Answer #1

1. Local Department Store:

Opportunity cost of time = 60 minutes (15 min to reach store +
30 min to shop + 15 min to come back) = **$ 16**

Total cost = 16 + Price of dress = 16 + 103 = **$
119**

2. Across Town:

Opportunity cost of time = 90 minutes (30 min to reach store +
30 min to shop + 30 min to come back) = $ 16 + $ 8 = **$
24**

Total cost = 24 + Price of dress = 24 + 85 = **$
109**

3. Neighboring City:

Opportunity cost of time = 150 minutes (60 min to reach store +
30 min to shop + 60 min to come back) = $ 16 x 2 + $ 8 = **$
40**

Total cost = 40 + Price of dress = 40 + 63 = **$
103**

4. **Neighboring city**.

Juanita is deciding whether to buy a skirt that she wants, as
well as where to buy it. Three stores carry the same skirt, but it
is more convenient for Juanita to get to some stores than others.
For example, she can go to her local store, located 15 minutes away
from where she works, and pay a marked-up price of $129 for the
skirt:
Store
Travel Time Each Way
Price of a Skirt
(Minutes)
(Dollars per skirt)
Local Department...

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and Separation Processing. The department employs 7 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
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Interviewing: 185 minutes.
Hiring: 130 minutes.
Assessment: 215...

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been reading about time-driven ABC and wants to apply it to her
department. She has identified four basic activities her employees
spend most of the their time on: Interviewing, Hiring, Assessment,
and Separation Processing. The department employs 6 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
activities:
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Hiring: 100 minutes.
Assessment: 155...

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been reading about time-driven ABC and wants to apply it to her
department. She has identified four basic activities her employees
spend most of the their time on: Interviewing, Hiring, Assessment,
and Separation Processing. The department employs 15 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
activities:
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Hiring: 70 minutes.
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been reading about time-driven ABC and wants to apply it to her
department. She has identified four basic activities her employees
spend most of the their time on: Interviewing, Hiring, Assessment,
and Separation Processing. The department employs 17 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
activities:
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Hiring: 72 minutes.
Assessment: 99...

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been reading about time-driven ABC and wants to apply it to her
department. She has identified four basic activities her employees
spend most of the their time on: Interviewing, Hiring, Assessment,
and Separation Processing. The department employs 14 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
activities:
Interviewing: 54 minutes.
Hiring: 69 minutes.
Assessment: 93...

The manager of the Personnel Department at City Enterprises has
been reading about time-driven ABC and wants to apply it to her
department. She has identified four basic activities her employees
spend most of the their time on: Interviewing, Hiring, Assessment,
and Separation Processing. The department employs 25 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
activities:
Interviewing: 65 minutes.
Hiring: 80 minutes.
Assessment: 115...

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been reading about time-driven ABC and wants to apply it to her
department. She has identified four basic activities her employees
spend most of the their time on: Interviewing, Hiring, Assessment,
and Separation Processing. The department employs 7 staff who
perform these activities. The manager provides the following
estimates for the amount of time it takes to complete each of these
activities:
Interviewing: 185 minutes.
Hiring: 130 minutes.
Assessment: 215...

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