Asked by Chris Fragy on May 23, 2024
Verified
Which of the following costs are always irrelevant in decision making?
A) avoidable costs
B) sunk costs
C) opportunity costs
D) fixed costs
Avoidable Costs
Expenses that can be eliminated if a particular decision is made or if an activity is ceased.
Sunk Costs
Costs that have already been incurred and cannot be recovered, and should not affect future business decisions.
Irrelevant Costs
Costs that will not be affected by a decision and should not be considered when making that decision.
- Gain insight into the significance of sunk costs, opportunity costs, and avoidable costs for making informed financial decisions.
Verified Answer
GG
gurpinder grewal
May 27, 2024
Final Answer :
B
Explanation :
Sunk costs are costs that have already been incurred and cannot be recovered or changed. These costs are therefore irrelevant in decision making, as the decision cannot change the fact that the costs have already been spent.
Learning Objectives
- Gain insight into the significance of sunk costs, opportunity costs, and avoidable costs for making informed financial decisions.