Which of the following would be an example of a sunk cost Th

Which of the following would be an example of a sunk cost? The cost of a new oil burner that replaced a destroyed one. The cost of an old inefficient oil burner that will be replaced by a more modern and efficient one. Depreciation expense. Lost revenue from a bad debt.

Solution

New Oil Burner is replacing a destroyed one. Hence, it\'s an investment.

Since old bruner is only inefficient, we have not used it fully. So, Sunk Cost.

All depreciation expenses cannot be recovered and are sunk costs.

Revenue is what you gain and loss of revenue is not a sunk cost. The bad debt is money inveseted and is sunk cost.