If a business ignores some of its fixed costs as irrelevant to its production decision, this type of cost is termed:

Name: If a business ignores some of its fixed costs as irrelevant to its production decision, this type of cost is termed:
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Question

Quizplus · Accepted Answer

Fixed costs that have already been incurred and cannot be recovered are called sunk costs. Ignoring these costs in production decisions is common practice, as they are irrelevant to future decisions since the costs cannot be changed or avoided.

If a Business Ignores Some of Its Fixed Costs as Irrelevant