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| Topic: |
Business
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| Number of pages / Number of words: |
3 / 838 |
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When movement is decreased, fewer raw materials are used so the expenditure for raw materials falls. When action is greater than before, additional raw materials are used and expenditure therefore rises.
Actual and Opportunity Costs
(Piana 2003)Actual costs refer to real transactions, whereas opportunity costs refer to the alternative taken into consideration by decision makers who might want to choose the line of activity which minimize the costs...
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For example, this firm pays actual salaries to employees, the employees are accounted for and payment is definite and cost is actual. The firm has the opportunity to reduce those costs by firing HR managers that are unproductive thus the opportunities to save and minimize costs are available.
Sunk Costs
(Arkes 1999) Sunk costs are investment costs incurred before a certain activity takes place which cannot be recovered by the possible sale of the asset they produced and represent barriers to exit...
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