Question

Match the following statements to the appropriate terms.

a. A cost that cannot be changed by any present or future decision___________.
b. The process of identifying the financial data that change under alternative courses of action__________.
c. The potential benefit that may be lost from following an alternative course of action_________.

Answer 1

a. Sunk cost

b. Increment analysis

c. Opportunity cost

Step-by-step explanation:

a. The sunk cost is the cost already paid that will not be recovered in future. And, it's also called past cost.

The cost at the time of decision-making is not relevant. Hence, we ignored at the time of decision making

b. The incremental analysis is the analysis of available alternatives in which the highest revenues is generated with the minimum cost. In addition, it also analyzed the financial data

c. An opportunity cost is the cost which shows the loss of the benefit arise from the available alternatives in case when one alternative is selected