McAlister Company is operating at capacity and desires to add a new service to its rapidly expanding business. The service should be added as long as service revenues exceed:
A) variable costs.
B) fixed costs.
C) the sum of variable costs and fixed costs.
D) the sum of variable costs and any related opportunity costs.
E) the sum of variable costs, fixed costs, and any related opportunity costs.

Question

Quizplus · Accepted Answer

The correct answer is D because the service should be added as long as service revenues exceed the sum of variable costs and any related opportunity costs.

McAlister Company Is Operating at Capacity and Desires to Add