View Full Version : Opportunity cost vs relevant cost
 
 twobytes
Jan 4, 2005, 03:46 AM
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
Apr 11, 2005, 12:29 AM
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
Apr 11, 2005, 02:12 PM
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.