Opportunity cost of interest Given information: 2014, Total number of units required in the year is 204,000. Number on months in a year is 12. Numbers of units required in a month is 17,000. Rate of investment is 10%.

Step 1: Understand the given information Opportunity cost is the total of potential income and other benefits that are lost due to the rejection of alternatives. In this case, we are given the following information: - It is the year 2014. - The total number of units required in the year is 204,000. - There are 12 months in a year. - The number of units required in a month is 17,000. - The rate of investment is 10%. Step 2: Calculate the opportunity cost of the interest forgone The formula to calculate the opportunity cost of the interest forgone is: Opportunity cost of interest = Difference of average investment × Rate of interest Calculate the values: - The difference of average investment is $823,140.-Thepriceofperunitis$8.82. Substitute these values into the formula: Opportunity cost of interest = $823,140\times 10=$82,314 Working Notes: - Calculate the amount payable if the total number of units is purchased: Average amount payable = Total number of units × Price of per unit / 2 = 204,000 units × $8.82=$1,799,280 Step 3: Determine if the opportunity cost should be recorded in the accounting system To identify whether the opportunity cost should be recorded in the accounting system or not. Step 4: Determine the purchase decision The company should either purchase 204,000 units at the start of the year 2014 or 17,000 units each month. Step 5: Consider the factor at the time of decision making Factor that should be considered at the time of decision making is not specified.