All categories

2 years ago

When would sunk costs be irrelevant for current decision making?

Business

1 answer:

UkoKoshka [18]2 years ago

7 0

Sunk cost are always irrelevant when making current decisions.

Sunk cost is the cost that has already been incurred and cannot be recovered. Sunk cost should not be considered when making future economic decisions.

An example of sunk cost: A farmer buys a piece of land for $100,000. He plants on the land. Years later, the land becomes infertile. The farmer is considering selling the land. In this question, the cost of the land is sunk cost. The sunk cost is $100,000. The farmer should not consider this cost when determining if to sell the land or not.

To learn more about sunk cost, please check: brainly.com/question/17920044?referrer=searchResults

You might be interested in

if increasing physical capita increases productivity why would a company not buy newer faster computers for all its works every

Ivanshal [37]

Explanation:

Every year's investment on the physical capital may decrease the profit rate of the company though it is true that the fast computers and technological items can improve the productivity of the workers.

Every year investment is not required for the employees from company's point of view as they think it is over expending on the products which are not necessary and relevant.

7 0

4 years ago

A customer has a long stock position that has appreciated greatly in value. It is now October and the customer wants to protect

Tatiana [17]

Answer:

B. sell a "deep in the money" European style call of the stock

Explanation:

The difference between an American style call and a European style call is that the American style can be exercised any time before the expiration date, while the European style call is only exercised at the date of expiration.

The customer in this question, has a pre-defined point in time when he wishes to exit his long stock postion. Therefore he is selling a "deep in the money" European style call of the stock

3 0

4 years ago

Explain the equation for the income statement. What are the three major items reported on the income statement?

Sergio039 [100]

The equation for the income statement is Revenues - Cost of goods = Net income. The three major items reported on the income statement are net income, gross profits, and operating income.

The income statement is a statement of the profits and losses of a firm. It consists of three income statements. The Net income is derived by deducting the expenses of the firm from its revenues (Net income = Revenue - Expenses). It may also be calculated by adding the operating income with the non-operating items.

Gross profit is arrived at by subtracting the expenditure made on the products that were sold from the revenue of a firm. The Operating income is the result of subtracting the operating expenses from the gross profit.

To learn more about income statement : brainly.com/question/14308954

#SPJ4

4 0

2 years ago

When do credit card holders pay interest?

Tatiana [17]

Usually, it's over a monthly period.
Everybody's Credit is different, because people have different Credit Scores

Hope this helps!!

5 0

3 years ago

List and explain ten factors to consider in preparing family income

aniked [119]

Answer:

1. Availability of Money:

The expenditure of a family depends upon the availability of money or total income of the family. It can afford to spend under various needs. In lower income group, families expenditure is more on food. Higher income group families spend more on recreation, education and luxuries etc.

2. The size and the composition of the family:

Expenditure depends upon the size and composition of the family. The size of the family means the number of adults and children. The more the mouths to eat the expenditure is more on food, clothing and shelter. With the growth of children, more will be spent on education and clothing. More will be spent towards transportation when the members go out of the house for work or study.

Composition of the family means the number of adults and children in the family. It also includes the number of males, females and old persons. For old persons, extra expenditure will be incurred towards health and medical expenses.

3. Stages of family life cycle:

Family life cycle plays an important role in spending money. At the beginning stage, most part of the family income is spent towards the establishment expenditure as a newly married couple starts their family life. In the expanding stage families need money for the children, their food, dress, education etc. Some families in the expanding stage spend more on purchasing durable household goods, furniture etc. In the contracting stage major expenditure is on wedding celebration of their children. During this stage, the family income is gradually reduced. So the expenditure should be cut short.

4. Occupation of the family members:

Sometimes expenditure of the family depends upon the occupation of the family members. In certain jobs, there are special benefits like free quarters, educational facilities for children, health and medical allowance, travelling allowance etc.

5. The needs and objectives of the family:

Expenditure will be done according to the needs and objectives of the family. For example, a family where young children are there, more will be spent for nutritious foods. Old people require health and medical expenses. Working women spend money for the servants as they do not find time to do the household work.

6. Resources:

Both human and material resources can make significant changes in the pattern of expenditure of a family. The abilities, skill, knowledge, interest, attitude and habits of the members of the family can be utilized for various purposes as supplementary income.

7. Locality of the family:

In rural areas more will be spent on food. But in urban areas the expenditure is more on education, recreation, transportation, accommodation etc.

8. Socio-economic status of the family:

The socio-economic status of the family is determined by its income, education level and occupation of the members. The higher the socio-economic status the expenditure will be more on interior decoration, higher education, club membership, accommodation, recreation etc. The total expenditure depends on the standard of living the family maintains.

9. Social and religious traditions:

Some families accept old and traditional values. So they spend more on marriages and religious festival.

10. Personal choice:

Expenditure depends upon the personal choice. For example, one person may have a liking for expensive perfumes and jewellery while another may have simple tastes. Expenditure is also affected by the measures taken in the family to make provision for the future like house building, higher education of children etc. The home-maker will be able to manage with her income by cutting out unnecessary and extravagant expenditure. “One must cut one’s coat according to his cloth.”

This saying is rightly proved in home management. Balancing of income and expenditure is the best way of money management. Whatever the income may be, the efficient management of money is a requisite for a happy, successful and peaceful family life.

8 0

3 years ago