If a selling segment has excess capacity,the opportunity cost of selling a product internally equals ________.
A) the variable costs of producing the product
B) the contribution margin the producing segment could have received from selling in the external market rather than the internal market
C) the variable costs plus the avoidable fixed costs of producing the product
D) zero

Question

Quizplus · Accepted Answer

When a selling segment has excess capacity, the opportunity cost of selling a product internally is zero because the capacity would otherwise go unused, and there are no forgone sales or additional costs associated with using this excess capacity for internal sales.

If a Selling Segment Has Excess Capacity,the Opportunity Cost of Selling