The opportunity cost of an alternate course of action that is relevant to a make-or-buy decision is
A) subtracted from the "Make" costs.
B) added to the "Make" costs.
C) added to the "Buy" costs.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

The opportunity cost of an alternate course of action in a make-or-buy decision represents the benefits foregone by not choosing the next best alternative. When considering whether to make or buy, the opportunity cost is added to the "Make" costs to accurately compare the total costs of making versus buying. This ensures that all relevant costs, including those of opportunities foregone, are considered in the decision-making process.

The Opportunity Cost of an Alternate Course of Action That