Samsung must confront sunk costs. Why are sunk costs irrelevant in deciding whether to sell a...
Samsung must confront sunk costs. 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? You may want to identify what a sunk cost is before addressing the question.
Homework Answers
Sunk costs are costs that are already incurred and have no
bearing on the current or any future decisions to be taken with
respect to the asset/capital investment.
For example, for an asset the sunk cost is the purchase price of
the asset which has already been incurred and is irrelevant to
consider while deciding whether the to sell a product in its
present condition/make it into a new priduct through additional
processing.
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