Opportunity cost
Opportunity cost is the benefit forgone from the best feasible alternative use of a scarce resource. It is relevant even when no separate ledger payment is recorded. Identify the actual alternative displaced and avoid double counting a lost contribution together with the revenue and costs already included in it. An idle resource with no alternative use does not acquire an opportunity cost merely because an internal charge exists.
Worked example
Using a machine for a special order prevents another job earning $400 contribution. That $400 is an opportunity cost in addition to the special order’s own incremental cash costs.
Common mistake
Do not use the gross revenue forgone when the displaced work’s costs would also be saved.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |
