Which of the following is an opportunity cost that should be considered in an outsourcing decision?
A) Avoidable fixed costs
B) Benefits from alternate uses of released capacity
C) Unavoidable fixed costs
D) Employee morale

Question

Quizplus · Accepted Answer

Opportunity cost refers to the potential benefits that could have been earned from the best alternate use of resources. In an outsourcing decision, the benefits from alternate uses of released capacity are the opportunity cost that should be considered. This includes the potential revenue that could have been earned if the resources were used for a different project or service. Avoidable fixed costs and unavoidable fixed costs are not opportunity costs as they are already incurred whether or not outsourcing occurs. Employee morale is also not an opportunity cost but rather a potential negative impact of outsourcing on the organization's culture and workforce.

Which of the Following Is an Opportunity Cost That Should