In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was:

A) $348,000
B) $340,000
C) $360,000
D) $411,000

Question

In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was:A) $348,000B) $340,000C) $360,000D) $411,000

Kelly Lopez · Accepted Answer

Final Answer : A, Explanation :  The sunk cost is the cost that has already been incurred and cannot be recovered. In this case, the sunk cost is $348,000, which refers to the cost of the model 370 machine that has already been purchased. Therefore, it should not be considered in the decision-making process between the two models. The decision should be based on the current and future costs and benefits of the two models. Since the model 220 machine has a lower purchase price and lower operating costs, it would be the better choice. Sunk cost = Cost of old machine = $348,000

In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was:

A) $348,000
B) $340,000
C) $360,000
D) $411,000

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