Which of the following statements regarding "opportunity costs" is true?
A) These costs are recorded routinely by most modern cost accounting systems.
B) These costs relate to the benefit lost or foregone when a chosen option (course of action) precludes the benefits of an alternative option from being realized.
C) These costs are generally deductible for federal income tax purposes in the U.S.
D) In terms of most short-run decisions, they are irrelevant.
E) They are usually considered a sunk cost associated with one or more decision alternatives.

Question

Quizplus · Accepted Answer

Opportunity costs relate to the benefit lost or foregone when a chosen option (course of action) precludes the benefits of an alternative option from being realized. It is important to consider opportunity costs when making decisions as they can have significant impacts on overall profitability and success. The other options are incorrect as they either do not accurately describe what opportunity costs are or provide inaccurate information about their relevance and treatment in accounting and tax systems.

Which of the Following Statements Regarding "Opportunity Costs" Is True