A Resource Granularity Framework for Estimating Opportunity Costs

Balakrishnan, Ramji; Sivaramakrishnan, Shiva; Sunder, Shyam

A Resource Granularity Framework for Estimating Opportunity Costs

Accounting Horizons, Vol. 18, No. 3, September 2004

Posted: 11 Sep 2015

See all articles by Ramji Balakrishnan

Ramji Balakrishnan

University of Iowa - Department of Accounting

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Date Written: February 1, 2004

Abstract

This paper presents a framework to help decisions makers better measure the opportunity cost of resources with different granularity. We characterize resources by the intrinsic lumpiness of acquisition (acquisition granularity), storability of benefits (expiration granularity), and control over the rate of consumption of available benefits (consumption granularity). We illustrate how these concepts can help make better decisions and yield sharper insights into observed practices.

Keywords: opportunity cost, resource management, time-based costing, resource granularity, costing and decision-making, cost systems

JEL Classification: M40, M46

Suggested Citation: Suggested Citation

Balakrishnan, Ramji and Sivaramakrishnan, Shiva and Sunder, Shyam, A Resource Granularity Framework for Estimating Opportunity Costs (February 1, 2004). Accounting Horizons, Vol. 18, No. 3, September 2004. Available at SSRN: https://ssrn.com/abstract=2656362