American Association of Family and Consumer Sciences (AAFCS) Practice Test

What does a cost/benefit analysis primarily evaluate?

1. The implementation costs of processes

2. Service quality versus customer satisfaction

3. The estimated cost versus the estimated benefits of options

4. Employee performance against organizational goals

The correct answer is: The estimated cost versus the estimated benefits of options

A cost/benefit analysis primarily evaluates the estimated cost versus the estimated benefits of options. This analytical tool is essential for decision-making, as it helps to quantify the financial implications of different choices and compares the expected benefits against the costs incurred. By determining whether the anticipated benefits outweigh the costs, stakeholders can make informed decisions about whether a particular strategy, project, or investment is worthwhile. In the context of evaluating options, this method provides a clear framework, allowing for the identification of the most economically viable alternatives. It considers both tangible and intangible factors, making it versatile in various applications, from business investments to public policy decisions. This approach aids in identifying the most beneficial course of action based on a comprehensive look at potential returns relative to the required investments.