A cabinet firm paid $5,000 for 10,000 pieces of cabinet hardware. The firm has used 4,000 pieces of hardware and is holding the remaining 6,000 pieces in inventory. The current market price for the 6,000 pieces of hardware is $2,800. What is the sunk cost of purchasing the cabinet hardware?

Question

Quizplus · Accepted Answer

The sunk cost is the cost that has already been incurred and cannot be recovered. In this case, the cabinet firm already paid $5,000 for the hardware, so regardless of how much they sell it for or how much they have left in inventory, the sunk cost remains $5,000. Therefore, the correct answer is B) $5,000.

A Cabinet Firm Paid $5,000 for 10,000 Pieces of Cabinet