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I know that opportunity cost is a lost contribution foregone by choosing another project. BUT can you please say that whether it is true that “it refers to the opportunity between the choice to sell material as scrap if it has no other USE in the business or USES it in another project”?
BUT it is also correct to say that it is sometimes a scrap value in case that we’ve material that is of NO USE so we can sell it as scrap rather than keeping it. And sometimes it is the contribution of the project foregone?
If there is no other use for the material, then if it was not used in the new project it would be sold for scrap.
Therefore the relevant cost is simply the lost scrap proceeds (an opportunity cost).
Have you watched my free lectures on relevant costing? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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