A sunk cost is:
A)a cost which may be saved by not adopting an alternative.
B)a cost which may be shifted to the future with little or no effect on current operations.
C)a cost which cannot be avoided because it has already been incurred.
D)a cost which does not entail any dollar outlay but which is relevant to the decision-making process.

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered or avoided. Therefore, it should not be considered in decision making for the future as it is irrelevant. Choices A, B, and D refer to costs that are not sunk costs as they can be influenced by future decisions.

A Sunk Cost Is