Define Sunk Cost.

Explain Sunk Cost.

Sunk Cost is the sum that has already been incurred and cannot be recovered by any decision made now or in future. This cost is also called stranded cost. Example: A special purpose machine was bought by a company for Rs. 100000. The machine was used to make the product for which it was bought and now it is obsolete and cannot be sold. And it will be unwise to continue using that obsolete product to recover the original cost of the machine. In order words, Rs. 100000 already spent on that machine cannot be recovered in future. Such costs are said to be sunk costs and should be ignored in decision making process.
What things would you take into consideration while installing a costing system?
Following things should be taken into consideration while installing a costing system:..
What are the various elements of costs?
Material Cost: This is the cost of material or the commodity used by the organisation for its production purpose….Labour Cost: This is the cost, incurred in the form of remuneration paid…
What are overheads? How are they classified?
Overheads are the aggregate of Indirect Material cost, Indirect Labour and Indirect Expenses….
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