Question

_____ are the costs which have been created by a decision that was made in the past and cannot be changed by any decision that will be made in the future.

• A. Shutdown costs
• B. Fixed costs
• C. Sunk costs
• D. Variable costs

Answer 1

Answer: (C)

Sunk costs

Sunk costs are the costs which have been created by a decision that was made in the past and cannot be changed by any decisions that will be made in the future. A sunk cost cannot be recovered and are considered irrelevant for future decision making. They are he past expenditures and are also known as retrospective costs.