Which types of costs are typically not "avoidable" costs in a decision to accept a special order to make 10,000 units of product in a factory?
A) Opportunity costs of not filling some regular orders, due to capacity constraints
B) Outlay costs for materials for the special order
C) Past costs for buying the land where the factory is located
D) Outlay costs for variable overhead related to the extra 10,000 units

Question

Quizplus · Accepted Answer

Past costs for buying the land where the factory is located are sunk costs, meaning they have already been incurred and cannot be recovered. Therefore, they are not avoidable costs in the decision to accept a special order. The other options may be avoidable costs depending on the circumstances of accepting the special order.

Which Types of Costs Are Typically Not "Avoidable" Costs in a Decision