A sunk cost is described as which of the following? A. An outlay expected to be incurred in the future B. One that is relevant to a decision because it changes depending on the alternative course of action selected C. A historical cost that is always irrelevant D. A historical cost that may be relevant

Question

Business

Keon Romero

5 January, 15:30

A sunk cost is described as which of the following? A. An outlay expected to be incurred in the future B. One that is relevant to a decision because it changes depending on the alternative course of action selected C. A historical cost that is always irrelevant D. A historical cost that may be relevant

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Jordan Velez · Answer 1

Answer: Option C

Explanation: In simple words, sunk cost refers to the cost that a company has already incurred and cannot recover it in future in any way for example - market research cost before introducing a product in the market.

No matter whether the organisation takes the prospective project or not these costs are not recoverable, hence they are considered to be irrelevant with respect to decision making.

Hence we can conclude that the correct option is C.