COST ACCOUNTING
INFORMATION FOR DECISION MAKING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Opportunity costs are considered period costs rather than inventoriable costs for accounting purposes
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Opportunity costs must be considered by managers when making decisions.
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Opportunity cost plus the incremental future revenues and costs equal the relevant revenues and costs of any alternative when capacity is constrained.
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The opportunity cost of holding inventory is the income forgone by tying up money in inventory and not investing it elsewhere
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Detailed explanation-1: -The correct answer is d) The money a student spends on rent for his apartment while attending school.
Detailed explanation-2: -The money spent on food is not a part of the opportunity cost of going on holiday. Opportunity cost of production of a commodity refers to the cost which has to be sacrificed in terms of the next best alternative which could be produced out of that cost.
Detailed explanation-3: -Answer and Explanation: Of the given statements about opportunity costs, (a) III only is TRUE. I. The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions.
Detailed explanation-4: -Opportunity cost is defined as the cost of the next best alternative foregone. It represents the sacrifices that people must make due to the scarcity of resources.