OpenTuition.com Free resources for accountancy students
Free ACCA lectures and course notes | ACCA AAT FIA resources and forums | ACCA Global Community
There is a small description of opportunity cost plus in the notes, but it was nowhere to be found in the lecture. Sir can you please give a detailed explanation of what it is, accompanied with an example and its relevance in exams?
About foregone opportunities in particular..
The idea is very simple. Suppose you are going to produce a new product and are trying to decide on a selling price.
The materials used are in short supply and currently they are all used making another product which generates a contribution of $5 per unit.
Each unit of the new product will use 2 kg of material, whereas the existing product uses 1 kg of material per unit.
If we make the new product then every unit produced will mean that we are unable to produce 2 units of the existing product (because of the short supply of material).
Since the existing is generating $5 per unit and we will lost 2 units, each unit of the new product will have to generate $10 per unit.
Therefore the selling price will have to be at least the cost of production plus $10 for it to be worth producing.
(The extra $10 is an opportunity cost – we are not actually spending $10 but we would be losing $10 elsewhere.)
The idea is more relevant for other topics – for example in transfer pricing – and it is dealt with in more detail with examples in those chapters and lectures.
Awesome! Thank you Your way of explanation is very detailed and absolutely wonderful!
Got it! Thanks Open Tuition.
What questions on past papers should i look at for revision?
Thank you very much Jon for all your help. It means allot to all the students.
Thanks. Good and easy way to understand….
thanks its a great one
Very simple & useful……….
What topic does this fall under?
Is it decision making techniques (Pricing Decisions)??!
@desol, Pricing falls under decision making.
my computer says errror 404,the page has moved ,please help am stuck.
@faithnhawu, When does it say error 404? If you managed to get this page then the video plays OK.
I never knew these lectures were this good and Simplified.
its 100% supper.
i wont go to any other classroom again.this is good.cheers
This lecture was well executed. Thanks alot!
nice . .. thanx
Many thanks, much better than most of my university lectures.
Thank You very much Sir, You have done nice job.God Bless you.
was good but the video froze at 20 mins
makapenga,keep on doing that good work.God bless you very much
very nice lecture……
Thnks it was good…………..
any way i can get the volume?
@esthernky, hey when ever u place the mouse pointer anywhere on the tutorial you will find a tool bar appearing at the end of the video, in that tool bar u will find icons such as the pause button, refresh, volume icon …
pls i,ve not been able to listen to the lectures. There’s no volume. Any suggestions?
@omoyeni, hey when ever u place the mouse pointer anywhere on the tutorial you will find a tool bar appearing at the end of the video, in that tool bar u will find icons such as the pause button, refresh, volume icon …
You must be logged in to post a comment.
ACCA F1 /FIA FAB Dec 2013 Exam was...
F4 Dec 2013 Exam was... Post comments
F5 Dec 2013 Exam was... Post comments
F6 Dec 2013 Exam was... Post comments
F7 Dec 2013 Exam was... Post comments
F8 Dec 2013 Exam was... Post comments
F9 Dec 2013 Exam was... Post comments
P3 Dec 2013 Exam was... Post comments
P4 Dec 2013 Exam was... Post comments
P5 Dec 2013 Exam was... Post comments
P6 Dec 2013 Exam was... Post comments
P7 Dec 2013 Exam was... Post comments
Please post your comments and vote in our Instant Polls
FIA MA1 exam was...
FIA FA2 exam was...
FIA MA2 exam was...
CAT FAU Exam was...
CAT FTX Exam was...
CAT FFM exam was...
Return to top of page
Copyright © 2013 · Privacy and Cookies · Advertising · Contact us · Sitemap · Log in