The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of £720,000. If these microcomputers are upgraded at a total cost of £100,000, they can be sold for a total of £160,000. As an alternative, the microcomputers can be sold in their present condition for £50,000.
-The sunk cost in this situation is
A)£720,000.
B)£160,000.
C)£ 50,000.
D)£100,000.

Question

Quizplus · Accepted Answer

The sunk cost is the original cost of the microcomputers (£720,000), which is a past cost that cannot be recovered, regardless of the future action taken.

The Tingey Company Has 500 Obsolete Microcomputers That Are Carried