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Session 02 - Session 2 Cost Concepts Some Basic Cost...

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Cost Concepts Session 2
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Some Basic Cost Terminology Cost – resource(s) sacrificed to achieve a specific objective Cost Object – anything of interest for which a measure of cost is desired Actual vs Opportunity Costs An actual cost is the amount of resources actually used to achieve a goal e.g. wages paid to employees to produce a unit of product An opportunity cost (benefit) is a benefit foregone (a cost avoided) by taking one action rather than another. That is, the opportunity cost of doing one thing is not being able to do another. e.g. the opportunity cost of going to university is the income that could have been earned during those years
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