Question

What is opportunity cost model in hr accounting?

Answer 1

Opportunity Cost. The opportunity cost method of human resource accounting, also referred to as the competitive bidding model, assigns value to an employee based on what each department would be willing to pay him.

Answer 2

Answer:

The opportunity cost method of human resource accounting, also referred to as the competitive bidding model, assigns value to an employee based on what each department would be willing to pay him.

Important models used in estimating the value of human resources of an organisation are as follows:

(I) Hermanson's Unpurchased Goodwill Model.

(ii) Hermanson's adjusted discounted future wages model.

(iii) Hekimian and Jones competitive bidding model.

(iv) Lev and Schwartz's present value of future earnings model.

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