Assessment 5: (Algo) The Bake Shop (TBS) buys and sells cakes. To... LO 1-5
The Bake Shop (TBS) buys and sells cakes. To preserve freshness TBS donates cakes that have not been sold within 5 days to charitable organizations. To avoid waste TBS usually orders fewer cakes than it can sell. Sold out signs are frequently seen in the store. Even so, the cakes come in several flavors and occasionally some of the flavors do not sell out before the 5 day shelf life expires. Cakes cost $16 each to purchase and are sold for $22 each. During the most recent month TBS had customer orders for 28 cakes that could not be filled due to a lack of inventory. There were only 12 cakes that had to be donated to charity during the month. Based on this information the
Multiple Choice
cost of waste amounted to $264.
cost of waste amounted to $448.
opportunity cost amounted to $336.
opportunity cost amounted to $168.
Please show clear working with excel sheet and formulas where possible

Opportunity cost is the potential benefit that is foregone when one alternative is chosen over another. It is the cost of making a decision in terms of the next best alternative that was not chosen. In a business context, opportunity cost can refer to the cost of not pursuing a particular course of action, such as choosing not to invest in a certain project or invest in a certain technology.

Explanation:

The cost of waste is calculated by subtracting the number of cakes sold from the number of cakes ordered, and then multiplying this difference by the cost of the cakes.

In this case, 28 - 12 = 16, and 16 x $16 = $256.

The opportunity cost is the difference between what was earned by selling the cakes and what it cost to purchase the cakes. In this case, $22 - $16 = $6, and 28 x $6 = $168.

Therefore, the correct option is Option D.

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