Which of the following would be considered a sunk cost?
A) Purchase price of new equipment
B) Equipment rental for the production area
C) Net book value of equipment that has no market value
D) Warehouse lease expense

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered. The net book value of equipment that has no market value represents a cost that has already been incurred and cannot be recovered. The purchase price of new equipment, equipment rental, and warehouse lease expense are all costs that can be avoided or reduced by making different decisions in the future, and therefore are not considered sunk costs.

Which of the Following Would Be Considered a Sunk Cost