Question

Question Why are sunk costs irrelevant in deciding whether to sell a product in its present condition or to make it into a new product through additional processing?

Answer 1

Step 1: Definition of sunk cost

 

The sunk cost is a cost that is related to a past decision. The sunk cost cannot be changed.  This cost is irrelevant to future decisions

 

Step 2: Irrelevant sunk cost

 

 The sunk cost is irrelevant to deciding whether to sell a product in its present condition or to make it into a new product because the sunk cost is already occurred and has no current amount of the sunk cost remains. The sunk cost cannot be changed. Hence, this is the reason that the sunk cost is irrelevant in deciding.

Answer

 

The sunk cost does not affect the future decisions of the company