A manager invests $400,000 in a technology that should reduce the overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.After the investment has been made,the $400,000 investment is

Question

​A manager invests $400,000 in a technology that should reduce the overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.After the investment has been made,the $400,000 investment is

Quizplus · Accepted Answer

The $400,000 investment is considered sunk costs as it has already been invested and cannot be recovered. It is not relevant in further decision making as the decision to invest has already been made and the focus should be on the actual cost reduction achieved by the technology. Therefore, choice A is the best one.

​A Manager Invests $400,000 in a Technology That Should Reduce

A Manager Invests $400,000 in a Technology That Should Reduce