BUSI 3008 Lecture Notes - Lecture 5: Historical Cost, Opportunity Cost
6 Dec 2016
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Chapter 11 relevant information and decision making. A future occurrence (anything transactions/decisions in the past are irrelevant) Collect all info & identify the options available. Make estimates about future costs & revenues as needed (are these estimates reliable?) Decide on 1 option and implement it. Evaluate how it goes and make changes as needed. Ex. fixed costs used to be 000, now they are 000, the incremental cost is 000. Sunk cost: something that happened in the past, when were analyzing and making a decision we do not want to include it. (in the past) Incremental cost & incremental revenue: constant base but there is a little bit above that is changing. The two options include full amount in analysis. Opportunity cost: a cost you give up by doing something else facility for production. Your opportunity cost is what else you could be doing in that space.
