Question

Benefit that is foregone as a result of pursuing some course of action is called Transfer cost a. b. Sunk cost Fixed cost C. d. Opportunity cost Select one: a. Opportunity cost O b. Sunk cost O c. Transfer cost O d. Fixed cost Clear my choice

Answer 1

Answer: ( a ) opportunity cost

Analysis: An opportunity cost is the benefit that is foregone as a result of pursuing some course of action.Opportunity costs are not actual cash outlays and are not recorded in the formal accounts of an organization.

To be precise, Opportunity cost is the profit lost when one alternative is selected over another.

Example: if you have $3,000,000 and choose to invest it in a product line that will generate a return of 8%. If you could have spent the money on a different investment that would have generated a return of 10%, then the 2% difference between the two alternatives is the foregone opportunity cost of this decision.

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