If a decision must be made to close a warehouse, non-refundable prepaid rent on the warehouse is
A)a sunk cost.
B)a common cost.
C)an opportunity cost.
D)a variable cost.

Question

Quizplus · Accepted Answer

Non-refundable prepaid rent on the warehouse is a sunk cost because it cannot be recovered once the decision to close the warehouse has been made. Sunk costs are costs that have already been incurred and cannot be recovered or changed regardless of any future actions. Choosing any of the other options would be incorrect.

If a Decision Must Be Made to Close a Warehouse