Charter the boat or keep it sailing? Valued by what each forgoes, this MT445 Unit 2 analysis gives the charter a $20,744 edge that vanishes below 43 percent recapture. Searches like "mt 445 unit 2 assignment example", "mt445 unit 2 sample" and "mt445 unit 2 example" land here.
What a finished MT445 Unit 2 opportunity cost analysis looks like
About five pages built on two tables and a sensitivity chart. Table one shows the accounting view the owners started from: $64,500 of charter fees against $163,800 of fare revenue from the same 30 weekdays, a comparison that seems to favor keeping the boat. The second restates both options as contribution. Scheduled service earns $109,680 after $2.90 per rider and $1,050 a day in vessel costs. The charter earns its fee plus riders the 400-seat car ferry recaptures, 58 percent of them during a drydock week last June, worth about $81,884. Wear from 420 charter hours, roughly $15,960 at the line's overhaul accrual rate, is then deducted, leaving the charter ahead by about $20,744. A closing chart plots that edge against recapture rates from 20 to 70 percent.
How a MT445 Unit 2 example is structured
Revenue figures open the paper only to be set aside, because they measure what each option brings in and ignore what each one uses up. Both options are then restated on one footing, contribution after the costs that change with the choice. Salaried crew wages are named and excluded, since the season contract pays them either way, and a single sentence says so rather than leaving the reader to wonder. Recapture sits at the center as the one number able to move the answer, and its source is described along with its weakness: June weekdays run quieter than July ones, so 58 percent may flatter the charter. Engine hours are priced as an economic cost the books would not record until the overhaul. The recommendation follows the break-even directly: accept the charter, with a recall clause if first-week recapture runs under 43 percent.
Fees against fares, and why that misleads
Setting $64,500 of charter income beside $163,800 of fare revenue makes keeping the boat look obvious. The paper shows that revenue ignores the $2.90 per rider and $1,050 a day that scheduled sailing consumes.
Scheduled service as contribution
Two hundred sixty riders a weekday at an average realized fare of $21, over 30 weekdays, leave $109,680 after per-rider and vessel costs. That is what the charter surrenders before any recapture.
Riders the car ferry can carry
When the small boat sat in drydock one June week, 58 percent of its weekday riders sailed on the larger vessel. Applied here, recaptured riders are worth about $81,884, with a note on why July may differ.
Four hundred twenty engine hours
Charter use brings the overhaul closer. At the $38 an hour the line accrues toward it, those hours cost about $15,960, a charge the monthly accounts would not show until the engines came apart.
Break-even and a recall clause
Counting wear, the charter pays once recapture passes about 43 percent, and it ties at 32 percent without wear. The paper recommends accepting, with the boat returned to service if first-week counts fall short.
Where marks go in MT445 Unit 2
Instructors grading this unit tend to check first whether the forgone alternative was valued or merely mentioned. Papers that define opportunity cost and then compare charter fees with fare revenue have done the bookkeeping and skipped the economics. Charging salaried crew to one option but not the other is a frequent slip that tilts the result. Treating every displaced rider as lost overstates the cost of chartering, while treating all of them as recaptured understates it; stronger work solves for the break-even between the two. Implicit costs such as engine wear toward an overhaul seldom appear in weaker drafts, though seeing them is the skill this unit exists to test. A recommendation offered without conditions, when its key figure rests on one June week, reads as more certain than the evidence permits.
Get a MT445 Unit 2 example written to your instructions
Tell us the choice your Unit 2 scenario poses and what each option would use up, then attach the instructions and rubric. Within 24-48h a sample comes back with both options restated as contribution, the forgone alternative valued rather than named, and a break-even worked for whichever figure is least certain. A first custom sample costs nothing.
MT445 Unit 2 questions, answered
How is opportunity cost different from the costs on an income statement?
An income statement records cash that left the business. Opportunity cost measures what the next-best use of a resource would have earned, whether or not any cash moves. In this example the charter's accounting cost is close to nothing, because the charterer buys fuel, yet its opportunity cost is the contribution the boat would have earned in service. Economic decisions turn on the second figure.
Should salaried wages count against one of the options?
Only if the choice changes them. Crew on a fixed season salary cost the same whether the boat charters or sails, so they cancel out of the comparison. Hourly overtime, an extra deckhand or a bonus tied to one option would count. State which labor costs you treated as unchanged, because graders often look at that line closely.
What if my scenario gives no figure for recaptured customers?
Then make the assumption visible and solve for the break-even, the rate at which both options earn the same. A reader can judge whether actual recapture is likely to sit above or below it. That turns a missing number into a conclusion that holds across a range, which usually beats guessing one value and presenting it as fact.