A company invested $400,000 in a technology that reduced the overall costs of production by reducing their cost per unit from $2 to $1.85.Later,a manager has an opportunity to outsource production to another company at a cost per unit of $1.75.If you are the manager,you

Question

​A company invested $400,000 in a technology that reduced the overall costs of production by reducing their cost per unit from $2 to $1.85.Later,a manager has an opportunity to outsource production to another company at a cost per unit of $1.75.If you are the manager,you

Quizplus · Accepted Answer

The $400,000 investment is a sunk cost, meaning it cannot be recovered and should not influence future decisions. Therefore, it should be ignored (choice A & C). However, the manager should still consider the new opportunity to outsource production at a lower cost per unit, as this will further reduce their overall production costs.

​A Company Invested $400,000 in a Technology That Reduced the Overall

A Company Invested $400,000 in a Technology That Reduced the Overall