Practice Sunk Cost (20.3.2) - Cost Accounting Basics – Types of Costs - Management 1 (Organizational Behaviour/Finance & Accounting)

Practice: Sunk Cost

Lesson 20.3.2Cost Accounting Basics – Types of Costs

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9 questions

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6 sample questions

Question 1.
Define sunk cost.
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Think about costs related to past expenses that you cannot get back.
Question 2.
Give an example of a sunk cost.
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Consider expenses that cannot be refunded.
3Question 3.
What are sunk costs?
- Recoverable costs
- Lost future benefits
- Costs that cannot be recovered
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Think about expenses that can't be refunded.
4Question 4.
True or False: Sunk costs should influence current decision-making.
- True
- False
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Focus on what's recoverable for future choices.
Question 5.
You have invested $15,000 in a startup that is losing money each month. Assess the importance of recognizing the sunk cost in deciding whether to continue investing or shut down the startup.
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Focus on the startup's future earning potential rather than the past loss.
Question 6.
A company decides to continue production of a popular product even though market trends show a decline in demand. They reference the heavy advertising costs already incurred. Analyze the decision considering sunk costs.
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Consider potential future income instead of past investment.

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