Question

Which of the following statements is​ FALSE? A. When computing the incremental earnings of an investment​ decision, we should include all changes between the​ firm's earnings with the project versus without the project. B. Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis. C. Because value is lost when a resource is used by another​ project, we should include the opportunity cost as an incremental cost of the project. D. Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation.

Answer 1

The answer is B. Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis.