COST ACCOUNTING
INFORMATION FOR DECISION MAKING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$30
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$45
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$75
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$105
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Detailed explanation-1: -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-2: -Buying 1, 000 shares of company A at $10 a share, for instance, represents a sunk cost of $10, 000. This is the amount of money paid out to invest, and getting that money back requires liquidating stock. The opportunity cost instead asks where that $10, 000 could have been put to better use.
Detailed explanation-3: -The opportunity cost will be the time foregone spent at home instead of time for reaching the concert and then attending the concert and the time to reach home afterward.