Which of the following can be categorized as a sunk cost of a firm?
A)The retirement benefit provided to the workers
B)The investment on a research project that failed to take-off
C)The higher wages paid to workers for working extra hours
D)The value of the closing stock of inventory

Question

Quizplus · Accepted Answer

A sunk cost refers to a cost that has already been incurred and cannot be recovered. In this case, the investment made on a research project that failed to take off is a sunk cost as the money has already been spent and cannot be recovered by the firm. The retirement benefit provided to workers, the higher wages paid to workers for working extra hours, and the value of the closing stock of inventory are all costs that can be recovered or avoided in the future.

Which of the Following Can Be Categorized as a Sunk