Which one of the following is an example of a sunk cost?
A) $1,500 of lost sales because an item was out of stock
B) $1,200 paid to repair a machine last year
C) $20,000 project that must be forfeited if another project is accepted
D) $4,500 reduction in current shoe sales if a store commences selling sandals
E) $1,800 increase in comic book sales if a store ceases selling puzzles

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered or changed. Option B is an example of a sunk cost because the $1,200 paid for repairing a machine last year is a cost that has already been incurred and cannot be recovered. The other options (A, C, D, and E) involve potential future costs or benefits that can be altered by current decisions.

Which One of the Following Is an Example of a Sunk