I cant understand why the contribution lost on sales which could have been produced if the limiting factor wasnt there, is taken as an oppurtunity cost?
Eg: Possible sale quantity 1000
Possible production qty 800
Contribution per unit 10
Hence oppurtunity cost = 200*10 = 2000 Rs.
Why 2000 is the opportunity cost? Please explain the logic behind it.
Thank you!