TYPES OF COSTS AND DECISION-MAKING

Types of Costs and Decision-Making

Types of Costs and Decision-Making

Sunk Cost

A sunk cost is one which has already been incurred regardless of whether or not the project done, so it is not relevant to decision making and therefore must be suppressed in the analysis and valuation of a project. This definition is apparently too obvious and easy to understand and apply when evaluating a project, but before making its findings consider the following examples. Suppose Computers GL hires a marketing agency to conduct a market survey in order to establish the acceptance of a new model of laptop ...