COST ACCOUNTING
INFORMATION FOR DECISION MAKING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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getting plenty of sleep
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buying new clothes at the mall
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spending time with your friends
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getting exercise at the gym
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Detailed explanation-1: -The correct answer is Sunlight. Sunlight does NOT have an opportunity cost.
Detailed explanation-2: -A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).
Detailed explanation-3: -Now suppose that the lunch options are a salad or a hamburger, again assuming I definitely am going to end up eating something. In this case, the opportunity cost of choosing the salad is missing out on the unpleasantness of eating a hamburger I don’t like, a negative value.
Detailed explanation-4: -The opportunity cost of a choice is the value of the best alternative given up. Choices involve trading off the expected value of one opportunity against the expected value of its best alternative.