Certification of Capability in Business Analysis (CCBA) — Question 1

A business analyst is helping management determine which solution they should choose. As it happens that the organization can only choose one of the two solutions due to time and resource restrictions. Solution A worth $456,000 to the organization while solution B worth $565,000 to the organization. While solution A costs less, it is less risky and takes less time to complete so management elects to seize Solution A. What is the opportunity cost?

Answer options

• A. $565,000
• B. There is not enough information to know how much the solution will cost the organization.
• C. $109,000
• D. $456,000

Correct answer: A

Explanation

The opportunity cost is the value of the next best alternative that is forgone when making a choice. In this case, by selecting Solution A, the organization forgoes the potential value of Solution B, which is $565,000. The other options do not represent the concept of opportunity cost correctly.