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What Is Sunk Cost? |
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Answer» Sunk cost indicates the historical cost which has been incurred in the PAST. This type of cost is not relevant in the DECISION making process. For example-while deciding about the replacement of a machine, the DEPRECIATED BOOK value of the machine MAY not be relevant in the form of sunk cost. Sunk cost indicates the historical cost which has been incurred in the past. This type of cost is not relevant in the decision making process. For example-while deciding about the replacement of a machine, the depreciated book value of the machine may not be relevant in the form of sunk cost. |
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