Question

Sunk costs:

Question 6 options:

	a) cannot be changed
	b) are never relevant
	c) are historical costs
	d) all of the statements are correct

Answer 1

1)Sunk cost is the cost which has already incurred and cannot be recovered in future.

2)sunk cost is irrelevant for decision making , because decision making only affects the future business and sunk cost has no option to affect the future business decisions.

3)sunk are usually called as historical cost also since they are incurred in the past.

4) sunk cost cannot be altered or changed from time to time because they are already incurred.

Hence from the above points we can conclude that option D is the correct answer i.e all the statements are correct.

Sunk cost: irrelevant for decision making, Cannot be changed& historical cost.