Allocated Cost an Opportunity Cost Mighty Mint Co. produces a mint syrup used by gum and candy companies. Recently, the company has had excess capacity due to a foreign supplier entering its market . Mighty Mint is currently bidding on a potential order from Quality Candy for 5,000 cases of syrup. The estimated cost of each case is $18, as follows:

Direct Material $6
Direct Labor 4
Overhead 8
Total $18

The predetermined overhead rate is $2 per direct labor dollar. This was estimated by dividing annual overhead (1,000,000) by estimated annual direct labor (500,000). The $1,000,000 of overhead is composted $250,000 of variable costs and $750,000 of fixed costs. The largest fixed costs relates to depreciation of plant and equipment.

A. With respect to overhead, what is the opportunity cost of producing a case of syrup?

B. Suppose Mighty Mint can win the Quality Candy business by bidding a price of $16 per case (but no higher price will result in a winning bid. Should Mighty Mint bid $16.