Ask Question
29 May, 14:33

A manager invests $400,000 in a technology that should reduce the overall costs of production. The company managed to reduce their cost per unit from $2 to $1.85. After the investment has been made, the $400,000 investment is a. Considered a loss b. Considered sunk costs, not relevant in further decision making c. Considered sunk costs, but still relevant in further decision making d. Considered a profit

+2
Answers (1)
  1. 29 May, 18:13
    0
    Option B. Considered sunk costs, not relevant in further decision making

    Explanation:

    The reason is that the past costs are not relevant costs for future opportunities as it does not qualifies following conditions except that it was cash flow in nature:

    Cash flow Future related Differential

    So the cost that doesn't qualifies all of the three conditions are not considered relevant for decision making and is deemed sunk cost for future decision making process, which means it is not considered.

    So the option B is correct.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A manager invests $400,000 in a technology that should reduce the overall costs of production. The company managed to reduce their cost per ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers