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    twobytes's Avatar
    twobytes Posts: 2, Reputation: 1
    New Member
     
    #1

    Jan 4, 2005, 03:46 AM
    Opportunity cost vs relevant cost
    I am confused between the two costs, opportunity cost and relevant cost. What's the relation between them and difference from each ? Can someone help to explain it? Thx.
    ani_sargsyan's Avatar
    ani_sargsyan Posts: 1, Reputation: 1
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    #2

    Apr 11, 2005, 12:29 AM
    Relevant cost
    Quote Originally Posted by twobytes
    I am confused between the two costs, opportunity cost and relevant cost. What's the relation between them and difference from each ? Can someone help to explain it? Thx.
    Answer please !
    reinsuranc's Avatar
    reinsuranc Posts: 92, Reputation: 6
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    #3

    Apr 11, 2005, 02:12 PM
    Opportunity, relevant
    An opportunity cost is one which measures the cost of sacrificing one course of action in favour of another. If I play a video game rather mowing someone's lawn for a fee, the opportunity cost of the video game is the fee I chose not to earn.

    A relevant cost or benefit is one that will be affected by the decision. Overhead is not relevant because it is incurred whether you make the decision or not.

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