CIMA BA2 · Chapter 11 · Question 6 of 12
What is an OPPORTUNITY cost?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The benefit forgone by choosing one course of action instead of the next best alternative
Explanation
An opportunity cost is the value of the best alternative given up when a resource is used for a particular purpose. It is relevant to decisions even though it does not appear in the accounting records. A cost already incurred is a sunk cost, and a contractual future payment is a committed cost.
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