A retailer purchased some trendy clothes that have gone out of style and must be marked down to 60% of the original selling price in order to be sold.Which of the following is a sunk cost in this situation?

Question

Quizplus · Accepted Answer

The original purchase price is a sunk cost because it has already been incurred and cannot be recovered, regardless of whether or not the clothes sell at the marked down price. The current selling price, original selling price, and anticipated profit are all prospective costs or revenues that may still be affected by the decision to mark down the clothes.

A Retailer Purchased Some Trendy Clothes That Have Gone Out