How Often Are Sunk Costs Omitted from Decision Analysis

question 8

Multiple Choice

How often are sunk costs omitted from decision analysis?

• A) Never.
• B) Sometimes.
• C) Always.
• D) Only if immaterial.

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Definitions:

Mark Up

The percentage added to the cost price of goods to cover overhead and profit.

Direct Labor-Hours

This refers to the total number of hours worked by employees who are directly involved in the production of goods or services.

Machine-Hours

A measure of production activity that quantifies the total hours machines are operated in the manufacturing process.

Direct Labor Cost

The wages or salaries directly attributable to the production of goods or services, excluding indirect costs such as supervision and maintenance.