The concept of "opportunity costs" can be attributed to the planning and financial terminology. It is associated with the use of material resources, raw materials, technical, human and other resources that play an important role in the production process. Of particular importance is the accurate accounting of such costs in enterprises that are not entirely cost-effective or are experiencing some other difficulties. The rational use of the entire material and technical base in this case can help the company stay afloat.
Opportunity costs of production - these are the resources spent on the production of one type of product and estimated from the standpoint of lost opportunities to use them for other, alternative purposes. So, the company has a certain amount of money in the account. And it is necessary to update technical equipment - to purchase several machines. At the same time, additional quantities of raw materials are needed for production. Machines will be bought - raw materials will not be bought, and vice versa. The company management should consider the options and determine which investment will be more profitable and bring more benefits to production.
Consequently, opportunity costs are costs of this kind that, when applied in one place, cannot be applied in another. Their main properties are limited and rare. If a woman spends her money on the purchase of cosmetics, at the same time buy the same medicines or products, a thing, etc. she will not be able to. Therefore, using any resource in one area, we lose the opportunity to apply it somehow else. This law applies to everyday human life and activities, and financial, scientific, industrial spheres in the amount of entire countries, states. The interests of manufacturing enterprises are especially affected.
By virtue of this feature, any decision on the production, production of goods, goods , etc. makes you refuse to use the same resources for the manufacture of other products or other goods. And the costs spent on production, and there are opportunity costs.
The farmer grows crops such as zucchini and tomatoes on the plot. For each assigned a certain area. But once a farmer decided that more tomatoes should be grown. To do this, he will have to select part of the plot from the beds with vegetable marrows, reduce the area of land on which vegetable marrows grow. The opportunity cost of each tomato bush with fruits can be expressed in the number of zucchini that the farmer will now receive less, using land for tomatoes.
It is clear that, although this example is given for products of two types, in fact they are immeasurably more. In this case, you can measure opportunity costs with the help of money. Then the costs will be taken for the difference between the profit that can be obtained at the most profitable of all alternative options for using resources, and the profit that can actually be obtained.
It must be remembered that not all costs in production are considered alternative. Usually, any use of resources is planned, distributed and accounted for in advance (renting a building when opening a new office, purchasing office equipment and other equipment, carrying out repairs in the building, etc.). These costs do not participate in economic choice and do not fulfill the function of an alternative.
Speaking about the opportunity costs of the enterprise, we should mention their external and internal nature. External - this is explicit, this includes the remuneration of workers, payments for raw materials, fuel, transportation, energy. Those. it is money that pays for the resources that the company acquired. Implicit or internal - these are the costs of using resources that can be managed by the owners of the enterprise, company, company, etc.