When evaluating alternative uses of a capital asset,equivalent decisions are reached using the opportunity cost approach and ________.
A) cost-volume-profit analysis
B) contribution margin approach
C) absorption costing approach
D) incremental analysis

Question

Quizplus · Accepted Answer

Incremental analysis is the most appropriate approach for evaluating alternative uses of a capital asset because it considers the incremental revenues and costs associated with each alternative. Opportunity cost approach is used to evaluate the cost of using a resource in one way versus its next best alternative use. Option A, B, and C are more appropriate for analyzing operational decisions related to pricing, production, and costing.

When Evaluating Alternative Uses of a Capital Asset,equivalent Decisions Are