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If company have not an constraints in production opportunity cost equal A- 0 B- 1 C - undeterminable

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Question added by Ahmed kandil , Cost Controller , Battour Holding Cpompany
Date Posted: 2015/01/07
Nemani Kumar
by Nemani Kumar , Sr. Management GM Projects , Unitech

well i am not a cost accountant however shall try to give an answer but i am not so sure about it since i am related towards the production function which can be linked to Q = K.5L.5

and where the definition of the opportunity is the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

secondly the difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding6%. In this situation, your opportunity costs are4% (6% -2%).

cheers

nemani

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