To make a decision to attempt to build an application system based on what was left after a previous attempt ended in failure primarily because of the large investment the company made in the failed project most likely was made by a manager who did not fully understand:
A) Direct Costs
B) Indirect Costs
C) Sunk Costs
D) Learning Curve Costs
E) Reserves Costs

Question

Quizplus · Accepted Answer

The decision to attempt to build an application system based on what was left after a previous attempt ended in failure primarily because of the large investment the company made in the failed project most likely indicates that the manager did not fully understand sunk costs. Sunk costs are costs that have already been incurred and cannot be recovered, even if the decision to continue with the project is abandoned. It is not a relevant factor in decision-making because it is already spent and cannot be recovered. Therefore, basing a decision on sunk costs is not a rational decision.

To Make a Decision to Attempt to Build an Application