Hartley's Meat Pies is considering replacing its existing delivery van with a new one.The new van can offer considerable savings in operating costs.Information about the existing van and the new van follow:

Sunk costs include ________.
A)the accumulated depreciation of the existing van
B)the original cost of the new van
C)the current salvage value of the existing van
D)the annual operating cost of the new van

Question

Hartley's Meat Pies is considering replacing its existing delivery van with a new one.The new van can offer considerable savings in operating costs.Information about the existing van and the new van follow:

Sunk costs include ________.

Sunk costs include ________.
A)the accumulated depreciation of the existing van 
B)the original cost of the new van 
C)the current salvage value of the existing van 
D)the annual operating cost of the new van

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. The accumulated depreciation of the existing van is a sunk cost because it has already been accounted for and cannot be recovered. The original cost of the new van, the current salvage value of the existing van, and the annual operating cost of the new van are not sunk costs as they represent future costs or potential recoverable values.

Hartley's Meat Pies Is Considering Replacing Its Existing Delivery Van