While choosing the projects various relevant costs are to be considered.Sunk cost is one of such costs. sunk costs are costs which has already been incurred.The money has been spent and it will not be recovered.sunk costs are irrelevant and are not take into consideration while making decisions.
Answer and Explanation:
(a) Incorrect
Sales lost is not sunk cost. sales lost due to out of stock inventory is because of wrong decision and mismanaged inventory stock.
(b) Correct
Repair cost incurred and paid cannot be recovered back. it is not relevant for decision making as the cost has already been incurred.
Hence, it is a sunk cost.
(c) & (d) Incorrect
When one alternative is selected over another, there may be a loss of gain from t he project forgone. such gain which lost is called opportunity cost. (d) & (e) is opportunity cost.
(e) incorrect
increase in sale is increase in income. it is not a cost.
