A manufacturer of breakfast cereals has the opportunity to purchase barley at $3.00 a bushel for 10,000 bushels, if it also buys 5,000 bushels of wheat at $16.00 per bushel. However, the manufacturer does not use any barley in its products, and currently needs 20,000 bushels of wheat. If the current market price of barley is $3.80 per bushel and that of wheat is $15.80 per bushel, should this opportunity be taken, and why? A. Because the value of the opportunity is positive, the opportunity should be taken. B. Because the company has no need of barley, the opportunity should not be taken. C. Because the opportunity does not meet the company's need for wheat, the opportunity should not be taken. D. Because the value of the opportunity is negative, the opportunity should not be taken.

A. Because the value of the opportunity is positive, the opportunity should be taken.

Explanation:

As we can see in the question that there are two cases

First one is when it is purchased on market price i.e

= 20,000 bushels × $15.80

= $316,000

The second one is of opportunity

The current need is of 20,000 wheat bushels but he buys 40,000 barley bushels  

So it would be

= $16 × 20,000 wheat bushels + $3 × 40,000  barley bushels

= $440,000

Now he sold at market price

= 40,000 × $3.80

= $152,000

So the net purchased cost is

= $440,000 - $152,000

= $288,000

As we compare both costs so the wheat of bushels is $28,000 less in case when he takes the opportunity

Therefore the opportunity should be accepted

answer; blank(1); /// whitelisting; blank(2); // blacklisting;

answer founder's agreement;