Pearl Company is considering replacing equipment that originally costs $75,000.A new machine will cost $800,000 and the old equipment can be sold for $15,000.What is the sunk cost in this situation?
A)$15,000
B)$75,000
C)$800,000
D)$60,000

Question

Quizplus · Accepted Answer

Sunk cost is a cost that has already been incurred and cannot be recovered. In this case, the sunk cost is the original cost of the equipment, which is $75,000.

Pearl Company Is Considering Replacing Equipment That Originally Costs $75,000