Buying multiperiod activity capacity is often done by paying cash up front and is always:
A)relevant because it is a variable cost.
B)relevant because it could reduce future costs.
C)irrelevant because it is a sunk cost.
D)relevant because it generates future revenues or benefits.

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered, making it irrelevant to future decision-making.

Buying Multiperiod Activity Capacity Is Often Done by Paying Cash