What type of cost is already incurred due to past operational decisions and cannot be changed or recovered by any future decisions?

Explanation

• Sunk Costs are past, irreversible cash outflows that cannot be recovered or altered by any current or future decision.
• Rational financial management dictates that sunk costs must be completely excluded when evaluating prospective projects.
• Continuing a project solely to justify past sunk expenditure is known as the Sunk Cost Fallacy.