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John Moffat.
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Imran.Sajjad
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Hello. I am new here and I am looking for the answer to this question. Is there anyone to help?
Could you please explain me the difference between these costs such as:
1) Purchase cost
2) Replacement cost
3) Net realizable value
4) Opportunity cost
John Moffat
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The purchase cost is whatever was paid for the goods.
The replacement cost is how much it would cost to replace the item (i.e. what the purchase cost now it).
The realisable value is how much you could sell the item for.
The opportunity cost is the mount of any income that would be lost from not using the item as it is currently used.
I am assuming you are referring to questions on relevant costing, in which case all these terms are explained (with examples) in my free lectures. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
Imran.Sajjad
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