Distinguish between Shut down costs and Sunk costs. – InterviewSolution

1.

Distinguish between Shut down costs and Sunk costs.

Answer»

Difference between Shut down costs and Sunk costs.

Shut Down Costs :

A business firm may have to suspend its operations for a period due to some temporary problems e.g., shortage of raw-material.

Sunk Costs : Sunk costs are historical or past costs which cannot be changed by any future decisions e.g., Investment in plant and machinery.

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