Weston Steel purchased a new coal furnace six years ago at a cost of $2.2 million.Last year,the government changed the emission requirements and this furnace cannot meet those standards.Thus,Weston can no longer use the furnace,nor has it been able to locate anyone willing to purchase the furnace.Given the current situation,the furnace is best described as which type of cost?

Question

Quizplus · Accepted Answer

The furnace is a sunk cost because it has already been purchased and cannot be recovered or sold. It is now worthless to Weston Steel as it cannot be used or sold.

Weston Steel Purchased a New Coal Furnace Six Years Ago