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sunk costs : These are costs that were incurred in the past. Sunk costs are irrelevant for decisions, because they cannot be changed.
Opportunitycost: The profit foregone by selecting one alternative over another. It is the net return that could be realized if a resource were put to its next best use. It is "what we give up" from "the road not taken."
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Is it true or false that a cost that will not be affected by later decisions is termed an opportunity cost?
A cost that will not be affected by later decisions is termed a sunk cost.
What is the difference between sunk cost and fixed costs?
A fixed cost is a cost that will not change in total regardless of output. For example, no matter how much output you produce, rent expense is generally going to remain unchanged. A sunk cost is a cost that has already been incurred, and thus shouldn't factor into management decisions. For example, if you were making a decision about whether to manufacture a material rather than buy it from an outside provider, you would only care about which costs would change as a result of the decision. Any costs that would be the same regardless of whether you make or buy would be considered sunk costs.
What is sunk cost?
It is a cost which is generally incurred to ascertain information about the project.Such costs help's the experts to decide whether to start a project or not. eg:- cost of survey, consultancy charges before initiation of projetc.
Why are firms willing to accept economic losses in the short run but not the long run?
There are sunk cost in the short run but not in long run.
Are sunk costs easy to spot and are they simply the fixed costs associated with a decision?
Sunk costs are costs that have been incurred that cannot be reversed. For example, if you owned a car and payed for repairs that were not refundable and were deciding whether or not to purchase a new car, you would not consider the repair costs in your decision because those costs have already been made and you cannot receive the money back. You would only consider the costs that you may incur in the future when making your decision whether or not to purchase another car. Sunk costs are not considered in your decision.
What is the difference between opportunity cost and sunk cost with example?
Any cost which is incurred in past is called "Sunk Cost" while any cost which has to be secrificed while choosing between different alternatives is called "opportunity cost" For example you have purchased machinery for 100000 in previous year and earned 10000 and now you have chance to start producing some other product which will earn you 11000 then switching to new plan will cause you 10000 which you are expecting to earn in current year as well so that 10000 is the opportunity cost you will lose while the machinery cost is a sunk cost because no matter which alternative you choose you cannot change that purchase of machinery decision now.
Is it true or false that a cost that will not be affected by later decisions is termed an opportunity cost?
A cost that will not be affected by later decisions is termed a sunk cost.
Explain the relation between sunk costs and specificity?
Specificity refers to the percentage of an investment that will be lost if the asset is switched to another use. Sunk cost is a cost that cannot be avoided once incurred. The relation between them is
What is the difference between Cheonan ship and Titanic?
The main difference is that the RMS Titanic hit an iceberg and sunk, while the Cheonan was sunk by a North Korean torpedo. They really have nothing in common.
What is the difference between Lusitania and USS Maine?
Lusitania was not a warship, it was actually sunk by enemy action, and civilians were on board. It was also sunk after a warning had been given.
Why is the sunk cost is unavoidable cost?
Sunk cost is that cost which is incurred in past and it is unavoidable because any past decision or action cannot be reversed.
What is the difference between sunk cost and fixed costs?
A fixed cost is a cost that will not change in total regardless of output. For example, no matter how much output you produce, rent expense is generally going to remain unchanged. A sunk cost is a cost that has already been incurred, and thus shouldn't factor into management decisions. For example, if you were making a decision about whether to manufacture a material rather than buy it from an outside provider, you would only care about which costs would change as a result of the decision. Any costs that would be the same regardless of whether you make or buy would be considered sunk costs.
Which cost amounts can be found in a firm's accounting records?
sunk cost
Is fixed cost the same as sunk cost?
Sunk cost is that cost which is incurred in past so in decision making process any cost which is incurred in past has no effect on future events and due to which all fixed cost which are also incurred in past has no effect in future that's why it is not relevent for decision making process, so for decsion making point of view yes fixed cost is sunk cost.
What is the distinction or differences between an incremental cost and sunk cost?
incremental cost are defined as the change in overall cost that result from particular decision making. it include both fixed cost and veriable cost. sunk cost are those cost which are made once and for all can't be altered incremental or decreased by varying the rate of output, nor can they be recovered. for example - once it is decided to make incremental investment expenditure and the fund are allocated and spend
What is cost classification?
Cost classification refers to different kinds of existing costs in Economics. In microeconomic theory, there are opportunity costs, fixed and variable costs, as well as sunk costs and production costs. In accounting and management theory, costs can be direct and non-direct. There are also transferring costs and sunk costs (as in Microeconomics).
What is the definition of sunk cost?
A cost that has already been incurred and thus cannot be recovered. because it has already happened. Sunk costs are independent of any event that may occur in the future.
