COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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cost that are directly influenced by unit manager
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Past cost that are now irrevocable
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Cost that should be incurred in a particular production process
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Benefits lost from rejecting the next best alternative
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Detailed explanation-1: -A sunk cost, sometimes called a retrospective cost, refers to an investment already incurred that can’t be recovered. Examples of sunk costs in business include marketing, research, new software installation or equipment, salaries and benefits, or facilities expenses.
Detailed explanation-2: -Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken. In other words, a sunk cost is a sum paid in the past that is no longer relevant to decisions about the future.
Detailed explanation-3: -A sunk cost refers to money that has already been spent and cannot be recovered.
Detailed explanation-4: -A sunk cost is an irretrievable cost. Once spent, the sunk cost cannot be recovered when the firm leaves the industry. A sunk cost is incurred in the past and cannot be changed. A non-sunk cost is a cost that will only occur if a particular decision is made.
Detailed explanation-5: -sunk cost, in economics and finance, a cost that has already been incurred and that cannot be recovered. In economic decision making, sunk costs are treated as bygone and are not taken into consideration when deciding whether to continue an investment project.