No, the two are very different. Opportunity cost is the cost of a decision made that is considered the value of an alternative that is forgone. For example, if there is a choice between using a car and selling it, the opportunity cost would be the sale price of that car forgone. On the other hand, variable cost would be things like electricity bills, gas bills, the cost of grocery, etc. These are considered variable costs because what you pay each month may vary, based on consumption.
Variable costs vary depending on a company's production. Production, or output, and costs are included in variable costs. Production and costs are directly related.
If selling costs varies with production level then selling costs are variable costs but if they remain fix then these are fixed costs.
The importance of knowing which costs are fixed and which costs are very important in making a business profitable. In order to budget effectively, one needs to know costs that will always be the same (fixed) and the ones that sometimes change (variable).
An example of semi variable direct costs is wages. Since semi variable costs are partially fixed and variable, regular labor is fixed costs, as production rises and workers have overtime the overtime is considered the variable cost.
Yes generally direct costs are variable costs but there may be some direct costs which can be fixed costs as well.
The opportunity cost is defined as alternative cost - costs measured in output of products and services forgone.It can't be defined as variable cost. In the simple formula p = 2q + 100, we can say that 2 is the variable cost. In other words: it's not fixed like the 100.Opportunity costs are not restricted to financial or monetary costs though. The real costs of output forgone (e.g. when choosing between a number of products like shotguns and bananas), lost time / pleasure, or any other benefit that provides benefit should also be considered opportunity costs. Therefore real costs are part of opportunity costs.
No they are not the same things. Differential costs are ones that differ between different alternatives. Differential costs are used interchangeably with the terms avoidable, incremental, and relevant costs. However, variable costs are simply ones that vary with different activity levels. They do not necessarily differ between alternatives.
Variable operating costs + fixed operating costs = total operating costs.
Variable costs vary depending on a company's production. Production, or output, and costs are included in variable costs. Production and costs are directly related.
If selling costs varies with production level then selling costs are variable costs but if they remain fix then these are fixed costs.
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
According to Wikipedia and definition with which I agree: Variable costs are expenses that change in proportion to the activity of a business.Variable cost is the sum of marginal costs over all units produced. Opportunity cost on the other hand is not included in the financials in any way shape or form. In manufacturing, electricity can be fixed but a portion can be variable depending on machinery and extended hours. The opportunity cost can be the cost of your time to perform certain duties versus and the benefit from the duty you cannot perform due to the one you chose to perform.
The importance of knowing which costs are fixed and which costs are very important in making a business profitable. In order to budget effectively, one needs to know costs that will always be the same (fixed) and the ones that sometimes change (variable).
An example of semi variable direct costs is wages. Since semi variable costs are partially fixed and variable, regular labor is fixed costs, as production rises and workers have overtime the overtime is considered the variable cost.
Every time a choice is made, opportunity costs are assumed.
No. They are not.they are part of period costs.
Yes generally direct costs are variable costs but there may be some direct costs which can be fixed costs as well.