Overhead costs are sometimes incremental cash flows and other times are considered sunk costs.

Question

Quizplus · Accepted Answer

Overhead costs can be incremental if they change as a result of a specific decision or action, such as implementing a new project or expanding a business. However, if the overhead costs are already incurred and cannot be recovered, they are considered sunk costs and should not be factored into future decision-making.

Overhead Costs Are Sometimes Incremental Cash Flows and Other Times