Costs that are not relevant in calculating the financial impact of future decisions and are irrevocable in a given situation may be known as ____________.

Sunk costs

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Relevant costs

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Differential costs

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Opportunity costs

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Solution

The correct option is A Sunk costs
Sunk Cost is that cost which has already been incurred and can not be recovered. Sunk cost should not be considered while making the decision to continue investing in ongoing project as this cost has already been incurred.

For example depreciation is a sunk cost along with the cost of equipment because equipment also does not have any resale or alternative use.

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