Requirement 1. What is the opportunity cost of interest forgone from purchasing all 240,000 units at the
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Requirement 1. What is the opportunity cost of interest forgone from purchasing all
240,000 units at the start of the year instead of in 12 monthly purchases of 20,000 units per order? Let's begin the calculation for the opportunity cost of interest forgone by first determining the formula, then calculate the opportunity cost.
Difference in average investment | x | Investment percentage | = | Opportunity cost | |||||||
Requirement 2. Would this opportunity cost be recorded in the accounting system? Why?
The opportunity cost would not be recorded in the accountingsystem, due to
no actual transaction being recorded in the accounting system.
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
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