Identifying a Sunk Cost
Easysunk costsdecision analysis
Which item is a sunk cost when evaluating a future project decision?
- AFuture labor
- BA previously completed $20,000 study
- CFuture material
- DSalvage value
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Answer: B. A previously completed $20,000 study
The completed study is an incurred cost that cannot be changed by the present decision. Compare alternatives using future incremental costs and benefits, excluding sunk costs.
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