Which of the following costs should be excluded from incremental cash flows?
A)The wage costs related to producing the new product.
B)The cost of establishing a new plant.
C)The consultant's fee for the feasibility study of the project.
D)The plant operating costs.

Question

Quizplus · Accepted Answer

The consultant's fee for the feasibility study of the project is a sunk cost, which means it has already been incurred regardless of whether the project proceeds or not. Therefore, it should be excluded from incremental cash flows as it does not change based on the decision to undertake the project.

Which of the Following Costs Should Be Excluded from Incremental