If a company decides to outsource and then has freed capacity, the decision on what to do with that freed capacity would be based upon
A)avoidable fixed costs.
B)opportunity costs.
C)unavoidable fixed costs.
D)none of the above.

Question

Quizplus · Accepted Answer

The decision on what to do with freed capacity would be based on the opportunity cost, which is the cost of the next best alternative foregone. The company would need to evaluate whether to use the freed capacity for another activity, expand current operations, invest in new technology or products, or simply reduce costs. By considering the opportunity cost, the company can make an informed decision and maximize its potential benefits.

If a Company Decides to Outsource and Then Has Freed