ADM 2304 Lecture Notes - Lecture 12: Watch, Opportunity Cost, Fixed Cost

• School: University of Ottawa
• Department: Administration
• Course: ADM 2304
• Professor: Tony Quon

Document Summary

The answer lies in the way we allocate common xed costs products. to our our allocations can make a segment look less pro table than it really is. Example: opportunity cost = the bene t that is foregone as a result of pursuing some course of action. Opportunity costs are not actual dollar outlays and are not recorded in the formal accounts of an organization. special order = a one-time order that is not considered part of the company"s normal ongoing business. > when analyzing a special order, only the incremental costs and bene ts are relevant. Another example e. g, northern optical ordinarily sells the x-lens for . Xed production cost is per unit, and the variable selling cost is . A customer has requested a special order for 10,000 units of the x-lens to be imprinted with the customer"s logo.