A company spends $20 million researching whether it is possible to create a durable plastic from the process waste from feedstock preparation. The $20 million should best be considered ________.
A) as a sunk cost
B) as an opportunity cost
C) as a fixed overhead expense
D) as a capital cost

Question

Quizplus · Accepted Answer

The $20 million spent on research is a sunk cost because it represents money that has already been spent and cannot be recovered. The decision to continue with the project should be based on future costs and benefits, rather than the sunk cost of the research.

A Company Spends $20 Million Researching Whether It Is Possible