Question

Irrelevant and historical cost is _______

A Sunk cost Correct Answer Incorrect Answer
B Variable cost Correct Answer Incorrect Answer
C Notional cost Correct Answer Incorrect Answer
D Shut down cost Correct Answer Incorrect Answer
E Capitalized cost Correct Answer Incorrect Answer

Solution

Sunk Cost is a cost that has already been incurred and that cannot be recovered . In decision making, sunk costs are treated as bygone and are not taken into consideration when deciding whether to continue an investment project, as such they are irrelevant for decision making.

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