Question

A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called a(n):_____________.
a. Uncontrollable cost.
b. Incremental cost.
c. Opportunity cost.
d. Out-of-pocket cost.
e. Sunk cost.

Answer 1

Answer:

e. Sunk cost.

Explanation:

As per the given statement, the best appropriate option is sunk cost. As the sunk cost deals with the past cost which is already incurred in the past and it cannot be changed or avoided, neither it can be recovered. Example - Rent expense.

Plus it does not affect the future decisions that means it is irrelevant for decision-making aspects.