Question

A manager invests $400,000 in a technology that should reduce the overall costs of production. The company managed to reduce their cost per unit from $2 to $1.85. After the investment has been made, the $400,000 investment is

Answer 1

Answer:

a. Considered sunk costs, not relevant in further decision making

Explanation:

the missing options are:

• a. Considered sunk costs, not relevant in further decision making
• b. Considered sunk costs, but still relevant in further decision making
• c. Considered a loss
• d. Considered a profit

After the investment in new technology has been made, it will be considered a sunk cost, because they are no longer relevant or important when considering or evaluating future investments and projects. Sunk costs are expenses that have already been made and incurred, and cannot be recouped.