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Relevant costing

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Aishwarya Ramaswamy (Querist)
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14 January 2012 dear experts,
in advanced management practice manual q-5 unsolved they decided on incremental cost diff on taking & not taking the project. why should we take incremental we had already took opportunity cost/gain. in which case should i use this incremental basis.

waiting for your early reply

thanks indeed

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 January 2012 Opportunity cost is just the cost of alternative course of action, we are finding the cost of an alternative action instead of doing regular action, so that time only we can take opportunity cost, but incremental cost is the cost which compare with the incremental sales quantity or production quantity or sales value compared with the related incremental in revenue. so opportunity cost is the just identification of cost and incremental cost is the movement of that cost related to the movement of revenue

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