A Sunk Cost Is a Relevant Cost in Decision Making

question 57

True/False

A sunk cost is a relevant cost in decision making under the gross approach.

---

Definitions:

Net Profit Margin

A profitability ratio that shows what percentage of sales has turned into profits after all expenses are deducted.

Gross Margin

The difference between sales revenue and cost of goods sold, often expressed as a percentage, indicating the profitability of a company's core activities.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments based on its operating income.

Times Interest Earned

A financial ratio that compares a company's operating income before interest and taxes to its interest expenses, indicating how well it can cover interest payments with earnings.