Even after a company shuts its business, it may still have to pay pensions. Referring to the taxonomy of costs (Figure 6.1 in the text), how would you describe the cost of the pensions?

Question

Quizplus · Accepted Answer

The cost of pensions is considered a sunk cost because it is a cost that has already been incurred and cannot be recovered, regardless of future actions. Even if the company shuts down, the obligation to pay pensions remains due to past employment agreements.

Even After a Company Shuts Its Business, It May Still