Why should relevant costs be reflected in the objective function but not sunk costs?

Question

asked Nov 19, 2023 89.0k views

1 Answer

Snehasis · Answer 1 · 2023-11-26T05:41:03+0000

Answer:

Sunk costs (past costs) or committed costs are not relevant. Sunk, or past, costs are monies already spent or money that is already contracted to be spent. A decision on whether or not a new endeavour is started will have no effect on this cash flow, so sunk costs cannot be relevant.

Step-by-step explanation:

Why should relevant costs be reflected in the objective function but not sunk costs?

Please log in or register to add a comment.

Please log in or register to answer this question.

1 Answer

Please log in or register to add a comment.

No related questions found

Other Questions