Asked by Erick Varela on Jul 11, 2024
Verified
Sunk costs and future costs that do not differ between the alternatives may or may not be relevant in a decision.
Sunk Costs
Costs that have already been incurred and cannot be recovered, and thus should not affect future business decisions.
Future Costs
Costs that will be incurred in the future, impacting decisions on investments, production, and other business activities.
Relevant
Relates to or directly impacts the subject under discussion.
- Gain an understanding of the significance of segregating relevant from irrelevant costs in decision choices.
- Compare and contrast avoidable costs with sunk expenses.
Verified Answer
NN
Natasha NoboaJul 13, 2024
Final Answer :
False
Explanation :
Sunk costs are costs that have already been incurred and cannot be recovered, so they are not relevant to future decisions. Future costs that do not differ between alternatives are also not relevant because they do not affect the decision-making process; only costs that differ between alternatives should influence the decision.
Learning Objectives
- Gain an understanding of the significance of segregating relevant from irrelevant costs in decision choices.
- Compare and contrast avoidable costs with sunk expenses.