Final answer:
A cost that will be incurred regardless of action is a sunk cost, and it is not relevant to a manager's decision-making, thus the statement is false. Managers should focus on variable and opportunity costs when making decisions.
Step-by-step explanation:
A cost that will be incurred regardless of which course of action a manager takes is known as a sunk cost. The answer to the student's question is b) False.
Sunk costs are costs that have already been incurred and cannot be recovered. They should not influence the decision-making process since they will remain the same no matter which course of action is taken. Rather, when making decisions, managers need to consider variable costs and opportunity costs. Variable costs are those that can change depending on production levels and decisions, and opportunity costs represent the benefits of the next best alternative that is foregone as a result of choosing one option over another.
An example of this would be when a company decides whether to continue a project or not. The initial investment (sunk cost) should not affect the decision; instead, the focus should be on future expenses and revenues that are directly impacted by the decision. On the other hand, opportunity costs need to be considered, such as the potential profits from redirecting resources to a more lucrative project.