Asked by
Amanda Coleman
on Nov 07, 2024
Verified
You spent $500 last week fixing the transmission in your car. Now, the brakes are acting up and you are trying to decide whether to fix them or trade the car in for a newer model. In analyzing the brake situation, the $500 you spent fixing the transmission is a(n) _____ cost.
A) opportunity
B) fixed
C) incremental
D) sunk
E) relevant
Sunk Cost
Costs that have already been incurred and cannot be recovered, and thus should not influence current/future business decisions.
- Separate relevant from irrelevant financial considerations, such as sunk costs, opportunity costs, and incremental costs, in the assessment of projects.
Verified Answer
GR
Learning Objectives
- Separate relevant from irrelevant financial considerations, such as sunk costs, opportunity costs, and incremental costs, in the assessment of projects.