What is Normal costing?
Right at the very start of cost accounting we understand that decision making is one of the crucial and an ongoing process in every organization. Managers have to decide about many things all the time and for this they need relevant and reliable information or to be specific complete information. This is where cost accounting […]
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 meant by Shadow prices?
Shadow price or dual price is a quantitative technique to analyze the improvement in the contribution or costs by having one additional unit of a resource which is causing a bottleneck. This analysis basically helps management in deciding whether a struggle to uplift the constraint is worthwhile or not. Before we look at the definition […]
