implicit cost

(redirected from imputed cost)

Implicit Cost

The opportunity cost of an activity. Implicit costs are what a company or individual could have earned had a different decision been made. For example, suppose an independent consultant has two clients and she spends some time working on the first client's project. The implicit costs are what the consultant would have made had she worked on the second client's project instead. Implicit costs contrast with explicit costs, which are what someone actually spends on an activity. It is also called an indirect cost.

implicit cost

or

imputed cost

the OPPORTUNITY COST to a FIRM of using resources owned by the firm itself to produce its output. For example, if a firm occupies a building that it owns, it forgoes the opportunity of renting it out for some other use. Thus, implicit costs represent the sacrifice of income that could have been earned by renting out (or selling) the firm's resources to others.

To achieve an accurate measure of the total cost of producing goods or services, the firm must impute a rent to itself using a SHADOW PRICE based upon the current market rates for renting the property See PROFIT, EXPLICIT COST.

implicit cost

or

imputed cost

the OPPORTUNITY COST to a FIRM of using resources owned by the firm itself to produce its output. For example, if a firm occupies a building that it owns, it foregoes the opportunity of renting it out for some other alternative use. Thus, implicit costs represent the sacrifice of income that could have been earned by renting out (or selling) the firm's resources to others.

To achieve an accurate measure of the total cost of producing goods or services, the firm must impute a rent to itself based upon the current market rate for renting the property See PROFIT, EXPLICIT COST, SHADOW PRICE.

References in periodicals archive ?
The analysis of Benefit Cost Ratio (BCR) illustrates that BCR with imputed cost is less than one in all the cases i.
Contract notice: The distribution system operator (ab lithuanian gas) and the transmission system operator (ab amber grid) imputed cost of coverage for regulated activities, income audit outsourcing
The total variable cost (TVC) is the sum of all monetary costs while the net profit is the gross profit less imputed cost of own inputs.
Recordkeeping fees are to be identified separately, and if there is not a particular fee allocated to recordkeeping, providers must identify an imputed cost.
The main imputed cost that contributed to the relatively high total eco- nomic costs experienced in Baluchistan over the period was that for owned land.
Validate the self-reported utilization and imputed cost estimates by addressing the degree of concordance between MCBS, VHA, and Medicare Fee-For-Service (FFS) administrative datasets regarding:
Such characteristics of a benefit plan also may be used to improve the imputed cost for the benefit when the characteristics are available but the cost is missing.
Additionally, under either a discriminatory or nondiscriminatory plan, a key employee may exclude all imputed cost under a group-term life insurance plan provided to him or her after disability.
Also, Contribution Margin Level 3 might represent profitability after deducting the cost of any amortized research and development or imputed cost of interest on assets employed.
This rule amends the FAR to, among other things: (1) define "cost of money" as an imputed cost that is not a form of interest on borrowings, and as an "incurred cost" for cost-reimbursement purposes; (2) delete the definitions of "cost of capital committed to facilities" and "facilities capital"; and (3) delete the transportation cost principle in its entirety.
This section discusses regression analyses that relate the weighted average cost of debt (and the imputed cost of capital) to proxies for agency and financial distress costs and operating and interest rate risk exposure.
The higher the gross charge billed by a hospital, the higher the imputed cost, which tends to contribute to higher costs for the workers' compensation system.