Sunk costs are cash outlays that have already been made and therefore have no effect on the cash flows relevant to the current decision.

Question

Quizplus · Accepted Answer

Sunk costs are seen as irrelevant in making current decisions because they cannot be recovered or changed. The money has already been spent and is a non-recoverable expense. Therefore, it has no effect on the current decision-making process.

Sunk Costs Are Cash Outlays That Have Already Been Made