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SVEN [57.7K]
3 years ago
11

Past costs that are not affected by new decisions are known as

Business
2 answers:
Evgen [1.6K]3 years ago
5 0

The answer is sunk cost .

<h2>Further explanation </h2>

Sunk costs are costs that are incurred and are not refundable. Before the issue, sunk costs are included in the opportunity costs section and are not relevant for future decision making. This term originates from the oil industry where the decision to stop or continue operating an oil well is made based on expected cash flow and not based on a lot of money spent on drilling it. This is usually referred to as embedded costs, previous year's costs, stranded costs, or sunk costs.

According to the dictionary, the sunk costs are costs incurred in the past that will not be affected by current decision making. In the accounting world, sunk costs are defined as costs that have been incurred and generally cannot be changed.

Sunk costs are related to fixed costs so to calculate sunk costs you can use the fixed cost formula, which is as follows:

<u>Fixed costs = sunk costs + fixed costs that can be avoided </u>

If seen from the formulation of fixed costs consisting of sunk costs and fixed costs that can be avoided. Fixed costs that can be avoided are fixed costs components that can be avoided, but sunk costs are components of fixed costs that cannot be avoided.

Learn more

Sunk cost brainly.com/question/7034592, brainly.com/question/13777436

Details

Class: High School

Subject: Business

Keywords: Past costs are not affected by new decisions.

salantis [7]3 years ago
4 0
<span>Past costs that are not affected by new decisions are known as sunk costs. Sunk costs do not need to be taken into account when making new decisions because the money associated with it was already lost and it can not be regained. This money is lost by businesses due to bad decisions, such as poor investments.</span>
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