Final answer:
Depreciation on production equipment is a sunk cost, and it is true that it should not be considered when evaluating two alternatives since sunk costs are not recoverable and should not affect future decisions.
Step-by-step explanation:
Depreciation on production equipment is considered a sunk cost because it is a cost that has already been incurred and cannot be recovered. When deciding between two alternatives, costs that are not going to be affected by the decision should not influence the choice. Hence, depreciation should be categorized as a non-relevant cost, and the true statement would be that it is not relevant when deciding between two alternatives. Sunk costs are historic costs and incorporating them into decision-making processes for future actions can be misleading and erroneous.