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A- direct cost B- Sunk cost C- relevant cost D- indirect cost
B- Sunk cost
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Sunk costs are costs that have been paid. A variable cost that is paid becomes a form of fixed cost called a sunk cost. Because the cost has already been paid, it is a fixed cost. Avoidable fixed costs become unavoidable fixed costs once the cost has been paid. Likewise, a variable cost becomes a sunk cost once it has been paid as shown in the figure below. For example, purchasing $2,000 worth of erasers to use in making pencils (above) is a sunk cost. So, as you progress through the production period, costs that were initially variable become fixed. Once the pencils are produced and entered into inventory, most of the variable costs have been incurred and become sunk or fixed costs.
Cost which not change with change in decision making is:
The given below is the correct answer.
B- Sunk cost
Answer B
Sunk cost is independent of events that may occur in the future, as once it has already taken place.
(C) is the Correct Ans.
Relevant Cost
Sunk cost
Because it has already been incurred and has no role in decision making.
