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 answer choices 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 the "Make" option, the opportunity cost is added to the "Make" costs to reflect the full cost of that decision, including what is sacrificed by not choosing the alternative.

The Opportunity Cost of an Alternate Course of Action That