Summer Lawn Care
Summer Lawn Care is a landscaping business owned by two partners who are in an argument while attempting to develop a decision. The partners may incur various costs in this process, such as sunk costs. For instance, they might incur associated, which include differential and avoidable expenses that vary with each decision that is implemented. The costs that they incurred after acquiring advanced technology for winter grass installations, which they did not have initially illustrates associated differential costs. The first partner who proposes about changing the business name, which will generate more revenue as a result of more customer interest and contracts may enhance opportunity cost for their business (Sivabalan, 2019).
Incurring irrelevant charges
The enterprise will continue to incur irrelevant charges such as sunk and fixed overhead costs. For instance, the partners had paid for business cards, signage, vehicle paint, and ads in Yellow Pages resulting from their prior decisions. The business has, therefore, incurred sunk costs (Sivabalan, 2019). The partners would also have to pay for fixed overhead rates for the maintenance of the advanced technology for winter grass installations and tree cutting services. The business is not replacing the prior technology with the advanced ones, and hence, it will not incur replacement cost. Additionally, the company will not have to incur an extra charge to generate customer interest and contracts (Sivabalan, 2019).
Implicit costs are also essential for the partners to identify, and they represent the opportunity cost of adopting resources owned by the business (Sivabalan, 2019). For instance, Summer Lawn Care business land space is owned by the two partners who contributed it for the operation of their enterprise activities. The shareholders do not earn a salary for offering the landscape to the organization. Additionally, Summer Lawn Care incurs exact cost while purchasing the technology for winter grass installations and maintenance and the machinery for cutting trees. The shareholders of businesses should, therefore, consider such various types of costs while developing decisions to enhance proper and effective operations in their organizations.
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