Question

What are sunk costs? Question 33 options: Costs that have already been incurred Difference in cost between two or more alternatives Costs that are under management’s influence Future costs that will differ between alternatives

Answer 1

Answer:

Costs that have already been incurred

Explanation:

Sunk costs are costs already incurred which are irrecoverable. These costs will stay the same irrespective of business actions and are also not considered for business decision in the future as they are deemed irrelevant .

If an organization wants to decide on business actions, they make use of relevant costs as they are cost meant for the future and will still be incurred. Revenue and cost that varies are only considered by organization to make a decision.

Example of sunk cost is money spent on rent. This money incurred cannot be recovered once it has been paid.