Sunk Costs ________

question 86

Multiple Choice

Sunk costs ________.

• A) are future costs for decision making
• B) are avoidable costs
• C) are irrelevant for decision making
• D) are foregone contribution by not using a limited resource in its next-best alternative use

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Definitions:

Variable Costs

Costs that vary directly with the level of production or business activity, such as raw materials, packaging, and labor directly involved in a company's manufacturing process.

Sunk Costs

Expenses that have already been incurred and cannot be recovered or altered, and should not be considered in future business decisions.

Cash Flow

The cumulative sum of funds moving into and out of a company, particularly influencing its liquid assets.

Opportunity Costs

The advantages that a person, business, or investor loses by selecting one option instead of another.