A dairy farmer must be able to calculate sunk costs in order to determine how much revenue the farm receives for the typical gallon of milk.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. Calculating sunk costs does not directly help in determining the revenue received for a gallon of milk; revenue calculation would focus on current and future costs and prices, not past, unrecoverable costs.

A Dairy Farmer Must Be Able to Calculate Sunk Costs