Question

Sunk costs are _________________.

• A. relevant for decision making
• B. not relevant for decision making
• C. cost to be incurred in future
• D. future costs

Answer 1

The correct option is B not relevant for decision making

Sunk Cost is that cost which is already spent. Once it is incurred, it can not be recovered. Since it is already spent, its irrelevant in decision making.

Examples are Rent of factory. Once Rent is paid, its not recoverable back. Its a sunk cost.