Question
A company purchased a specialised machine for ₹10 lakh
two years ago. Due to technological changes, the machine has no resale value today. The company is evaluating whether to replace it with a new automated machine that would reduce operating costs. While analysing the replacement decision, the accountant suggests considering the original purchase price of ₹10 lakh while computing the cost–benefit analysis. Which of the following best describes the nature of the ₹10 lakh cost?Solution
A sunk cost is a past cost that cannot be recovered. It is irrelevant for making future decisions because it will not change regardless of the chosen course of action. In the given case: ● The machine was purchased two years ago ● ₹10 lakh has already been spent ● The amount cannot be recovered or influenced by the replacement decision today
Which should be the third sentence after rearrangement?
Which of the following is the third sentence of the passage?
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Which is the FOURTH sentence of the paragraph after rearrangement?
Which is the SIXTH (LAST) sentence of the paragraph after rearrangement?
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