When Do Opportunity Costs Count Article Example | Topics and Well Written Essays - 500 words

When Do Opportunity Costs Count - Article Example The author in this article initiated with defining opportunity costs and how the knowledge is gained to properly identify the opportunity costs in any working environment. The author illustrated this idea by considering two different groups of people. This was experimented by using management accounting students with management accounting professionals (having proper management accounting work exposure and experience). Thus, this experiment lead to the conclusion that professional management accountants were more capable at identifying the opportunity costs associated with any project. This better identification of the opportunity costs was declared as the procedural knowledge by the writer. Later, the writer explains that opportunity costs perform as a referee between the two issues of the opportunity cost vagueness and the project completion stage. Opportunity cost vagueness, as described by the writer, is the inability to derive a proper and exact value for the benefit forgone i.e . the opportunity cost. The writer further explains that management accountants usually use estimates of opportunity costs and then these estimates are included in the final appraisal of a project. The management accountants who had higher knowledge of the Generally Accepted Accounting Principles were deemed to consider opportunity costs lightly as compared to accountants who had lesser knowledge of these Generally Accepted Accounting Principles. According to the writer, at the project completion stage, individual tend to invest heavily in the project with a rush to  finish off the project even in circumstances when the project is profitable one.