What is HIFO?
HIFO is an acronym for Highest in, First out. This inventory valuation method assumes that inventory with highest bought in value i.e. highest purchase price in the stock will be consumed first or in other words will be sent out to production hall at first place. One of the main advantage of using HIFO method […]
What is Opportunity cost and why is it a Relevant cost as well?
Opportunity costs are defined to be the economic value of the benefit sacrificed under one alternative to avail the benefit under another alternative course of action. For example, company have the option of manufacturing either alpha or beta. As company does not have enough resources to manufacture both of them so it will have to […]
What is the difference between Notional cost and Opportunity cost?
Notional costs and Opportunity costs are two important concepts in cost and management accounting as they have far reaching effects on decisions making process. But both are distinct and understanding the features of each type of cost is vital as it has important implications from decision making perspective. All opportunity costs included in the cost […]
What is Notional cost?
Notional means imaginary, speculative or conceptual i.e. something that has no actual existence and is mere imagination. Same way a notional cost is an imaginary cost which is sometimes included in the cost units and cost centers to make costing estimates more realistic or simply more challenging especially when the performance of cost unit and […]
