The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000. As an alternative, the calculators can be sold in their present condition for $11,200.The sunk cost in this situation is:
A) $10,000
B) $26,800
C) $11,200
D) $0

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. In this case, the $26,800 spent on the calculators initially is a sunk cost because it has already been spent regardless of what decision is made now.

The Tolar Corporation Has 400 Obsolete Desk Calculators That Are