Opportunity costs are relevant costs, Cost Accounting

Opportunity Costs Are Relevant Costs

Opportunity cost introduces an additional concept that is not available like part of normal cost analysis in the accounting record system. Opportunity cost may be defined by 'the best opportunity foregone via following a specific course of action' it may be redefined with the net cash flow lost via choosing one alternative quite than another. Opportunity cost may be essential in a number of decision making situations wherever an alternative option between possible futures courses of action examples are is as:

a) Whether to close a department instantly or in one year's time

b) Whether to operate an internal service department or to employ an outside service

c) Whether to accept one or another of two jointly exclusive contracts

Opportunity costs will be part of an incremental cost and revenue analysis in many type of decision making conditions.

Posted Date: 2/7/2013 1:51:52 AM | Location : United States







Related Discussions:- Opportunity costs are relevant costs, Assignment Help, Ask Question on Opportunity costs are relevant costs, Get Answer, Expert's Help, Opportunity costs are relevant costs Discussions

Write discussion on Opportunity costs are relevant costs
Your posts are moderated
Related Questions
Methods Required To Allocate Joint Costs 1) Physical/Unit Measure 2) Constant gross margin rate 3) Net realizable value.

What are the factors affecting working capital requirements

ABC bond is a 20-year bond with face value $1000. The coupon payment is $25 per 6 months. The semi-annual yield is 4%. Use the PV function in Excel (or equivalent) to Önd the price

Smart Ltd ha sa unit selling price of $500 variable costs per unit of $325 and fixed costs of $140 000. Calculate the break even point in units using (a) a mathematical equations a

Allocation of Joint Costs Whereas two or more products of relatively high value emerge simultaneously from a single process, they are named as joint products.  The processes s

MARGINAL COSTING AND DIFFERENTIAL COSTING 1.     Differential costing can be used both in case of marginal costing and absorption costing. 2.     In case of marginal costing

weekly working hour 48 , hourly wage rate 15$ , price rate per unit 6$ , normal time taken per piece 36 minuets , normal output per week 220 pieces , actual output per week 275 pie

Sam Edwards has been the accounting manager for Jade Manufacturing in a highly competitive international market for ten years. Jade Manufacturing produces heavy equipment for two m

Eagle Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Comput

Timbatown Pty Ltd is a manufacturer of timber tables and chairs. The company mostly sells on a retail basis to household consumers, but occasionally receives large orders for table