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GL Plastics spent $1,200 last week repairing a machine. This week the company is trying to decide if the machine could be better utilized if they assigned it a proposed project. When analyzing the proposed project, the $1,200 should be treated as which type of cost?

a. opportunity
b. fixed
c. incremental
d. erosion
e. sunk

Respuesta :

Answer:

e. sunk

Explanation:

The sunk cost is the cost that incurred in the past and does not have any role in the decision making also it is not relevant for the purpose of the decison making

So as per the given situation, since the $1,200 is spent last week for repairing the machine and now the company wants to decide but the decisions could not be taken

Therefore the option e is correct

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