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Only Managers have knowledge to measure opportunity cost.

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1. Measurement of Opportunity Cost

"Accountants cannot measure opportunity cost. Only managers have the knowledge to measure it." Do you agree with this statement? Why or why not?

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Solution Summary

In a 506 word solution, the response first provides a good definition for opportunity costs followed by an discussion of what kind of information is needed and who can provide it. Then the solution uses a comparative technique between for-profit and non-profit entities to demonstrate concepts.

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There is truth in both statements, but generally speaking, opportunity costs are often economic costs and can be measured. Accountants may not have all the knowledge to compare options to make a valid decision, but they certainly can contribute financial data assuming the opportunity can be quantified.

In defining an opportunity cost, here is a decent definition:

OPPORTUNITY COST
The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits (UTILITY) that you did without because you bought (or did) that particular something and thus can no longer buy (or do) something else. For example, the opportunity cost of choosing to train as a lawyer is not merely the tuition fees, ...

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