Costs that have been incurred as a result of past decisions are known as ________ costs.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, regardless of any current or future decision. These costs should not be considered in decision-making going forward. Therefore, the costs incurred as a result of past decisions are sunk costs. Option B, C, D, and E are not correct because they refer to different types of costs: variable costs vary with the level of production or sales, fixed costs remain constant regardless of the level of production or sales, opportunity costs are the costs of the next best alternative forgone, and marginal costs are the extra costs incurred by producing one additional unit of output.

Costs That Have Been Incurred as a Result of Past