Explain why sunk costs should not be included in a capital
budgeting analysis but opportunity costs and externalities should
be included (1 point). Give an example of each (1 point).
WEEK 5: RELEVANT COSTS
What is an example of an opportunity cost? How about a sunk
cost? Are either of these relevant? Avoidable? Examples from work
would be great!
Why are relevant costs important in decision making? Explain
sunk costs, incremental costs, opportunity costs, make or buy
decisions and strategic costing giving examples of each.
1.
Identify relevant costs, irrelevant costs, and sunk costs. Give an
example of each.
2. In 150 words or fewer, explain the difference between
relevant costs, irrelevant costs, and sunk costs.
Why is it that sunk costs are never relevant to a decision
whereas opportunity costs are always relevant?
Why do you think Goldratt’s Theory of Constraints received so
much press by the business community?