Selection of most profitable alternative is
Answers
Answer:
An alternative to comparing added revenue to added cost is to express them as a ratio (added revenue/added cost). As long as the ratio is greater than 1, the alternative will increase the farm's profit.
Answer:
The correct answer of this question is express them as a ratio.
Explanation:
Given - Profitable alternative.
To Find - Write about selection of most profitable alternative.
A ratio added revenue/added cost is an alternative to comparing added revenue and added cost. The alternative will increase the farm's profit as long as the ratio is greater than one.
The best way to determine the impact of an alternative on profit is to create a pro forma income statement for the business as it would be run if the alternative were chosen. This statement's estimated profit could then be compared to a pro forma income statement created for the current business. In general, it is assumed that the owners will choose the option with the highest profit potential.
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