A cost is sunk if it
A)is not an incremental cost.
B)is unavoidable.
C)has already been incurred.
D)is irrelevant to the decision at hanD.

Question

Quizplus · Accepted Answer

A sunk cost refers to a cost that has already been incurred and cannot be recovered. It is irrelevant to the decision-making process because it cannot be changed or altered. Therefore, the best choice is C - the cost has already been incurred. Choice A is incorrect because incremental costs are relevant to decision-making. Choice B is incorrect because avoidability is not a defining criteria for sunk costs. Choice D is incorrect because sunk costs are relevant to the decision-making process, but only to the extent that they cannot be changed or recovered.

A Cost Is Sunk If It