Question

A cost incurred in the past and that cannot be recovered in the future is called_______

• A. floating cost
• B. prime cost
• C. economic cost
• D. sunk cost

Answer 1

Answer:

D. sunk cost

A sunk cost is a cost that has already been incurred and cannot be recovered, regardless of future decisions. Sunk costs apply to personal and business settings. Once the resources (time, money, effort) are spent, they're gone and can't be recovered, no matter the outcome. Rational decision-making assumes that sunk costs should not affect future decisions.