Managers Should Generally Consider Opportunity Costs in Both "Keep or Drop

question 77

Multiple Choice

Managers should generally consider opportunity costs in both "keep or drop" and "make or buy" decisions. Which of the following is an opportunity cost they should consider in both situations?

• A) Avoidable fixed costs
• B) Benefits from alternate uses of released capacity
• C) Depreciation on new machinery
• D) Market share

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Definitions:

End-Of-Period Spreadsheet

A tool used in accounting to gather all account balances at the end of an accounting period to prepare financial statements.

Dividends

Money paid out to shareholders by a business, generally coming from the business's profits.

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Retained Earnings

The portion of net income that is not distributed to shareholders but is kept by the company for reinvestment or debt payment.