The difference between accounting cost and opportunity cost is as follows:
| Accounting Cost |
Opportunity Cost |
1. Accounting costs refer to the costs recorded in the books of account of a firm. These are the expenditures incurred by a firm in the production process.
For example, if a firm manufactures tables, the cost of labour used in the production of the table is accounting cost. |
1. Opportunity cost refers to the value of the next best alternative selected over another. For example, the producer can use the building for either manufacturing tables or producing gloves. The producer decides to use the building for manufacturing tables, then the income that the producer could have earned from the building by producing gloves is the opportunity cost of producing tables.
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| 2. Accounting costs are explicit costs. |
2. Opportunity cost is the sum of explicit cost and implicit costs. |
