Question

hich of the following statement is CORRECT? A. A sunk cost is any cost that must be expended to complete a project and bring it into operation. B. An example of a sunk cost is a situation where Quiznos restaurant opens a new store and that leads to a decline in the sales of one of the firms' nearby franchises. C. An example of a sunk cost is Walmart incurred and expensed costs to open a new Walmart store and the costs cannot be recovered if Walmart decides not to go forward with the opening of the new store. D. A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the project.

Answer 1

Answer

D. A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the project.

Explanation:

As per the data given in the question,

Option (D) is correct among the given statements. A sunk cost is that cost which was occurred and expended in the past and if firm decides to do not go ahead, it can not be recovered.

For illustration - Think about the cost incurred to find out the feasibility of the project. Though in past firm was agree with the project but now even if the firm decides not to the project, this cost can not be recovered.