Which of the following costs is generally considered irrelevant in incremental analysis?
A) Sunk costs.
B) Out-of-pocket costs.
C) Incremental costs.
D) Opportunity costs.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, and therefore are not relevant in making decisions about future actions. Incremental analysis focuses on the costs and benefits of the relevant factors that would change as a result of a decision, and sunk costs are not part of those relevant factors. Out-of-pocket costs, incremental costs, and opportunity costs are all considered relevant in incremental analysis.

Which of the Following Costs Is Generally Considered Irrelevant in Incremental