Costs that have been incurred and cannot be eliminated regardless of the alternative chosen are _________.

Question

BlackTom AI · Accepted Answer

When analyzing the question, we must identify the term that describes costs already incurred that cannot be recovered regardless of future choices.
Option 1: relevant costs. These are costs that will differ across decision alternatives and thus matter for decision-making. Since sunk costs do not differ with the alternative, this option is incorrect as a characterization of the given scenario.
Option 2: unavoidable costs. This phrasing is not a standard finance/managerial accounting category for a specific kind of past cost, and it does not precisely capture the idea of costs that are unrecoverable regardless of what you do next. Therefore, it is not the correct label here.
Option 3: irrelevant costs. These are costs that do not affect the decision because they remain the same regardless of the alternative, or they have no monetary effect on the chosen course of action. The scenario, however, emphasizes costs that cannot be eliminated, which makes this option inappropriate.
Option 4: sunk costs. This is the established term for costs that have already been incurred and cannot be recovered, no matter what future decision is made. They should not influence incremental decision making because they will not change with any choice.
In summary, the correct classification is that these costs are sunk costs, while the other options fail to capture the essence of irrecoverable past expenditures relevant to decision making.

SU25_ACT_513_2601 WK 7 Pre-Class Check: Strategic Decisions with Cost Data

Costs that have been incurred and cannot be eliminated regardless of the alternative chosen are _________.

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