A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called a(n):
A) Out-of-pocket cost.
B) Incremental cost.
C) Uncontrollable cost.
D) Opportunity cost.
E) Sunk cost.

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered or changed. Therefore, it is irrelevant to future decisions. Out-of-pocket costs, incremental costs, and opportunity costs are all relevant to future decisions and can be avoided or changed. Uncontrollable costs, on the other hand, cannot be controlled by the decision-maker, but they can still be relevant to future decisions.

A Cost That Cannot Be Avoided or Changed Because It