Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 31

What is the difference between outlay cost and opportunity cost?

Step 1 of 2

Outlay Cost:-

The term “Outlay cost” is related to past, present, or future cash outflow. In layman terms, it’s a cost which is incurred in past, incurred in current Accounting period and likely to be incurred in future.

Opportunity cost: -

The term “Opportunity cost” is the value of alternative forgone born by adopting a particular strategy or employee resources in specific manner.