sunk costs

(redirected from Past Cost)

Sunk costs

Costs that have been incurred and cannot be reversed.

Sunk Costs

Money that has already been spent. Sunk costs are important because a company may use, for example, an old piece of equipment to make a new product. In this case, sunk costs are positive because no further investment is required. On the other hand, a sunk cost may be negative; for example, that old piece of equipment may break down after its warranty has expired. This means that the owner will not recover the costs no matter what happens.

sunk costs

any expenditure on durable and specific FACTOR INPUTS, such as plant and machinery, that cannot be used for other purposes or easily be resold. Such sunk costs have no affect on MARGINAL COSTS and do not influence short-term output decisions.

The presence of sunk costs through investment in TRANSACTION-specific assets can affect the relative bargaining power of parties to a CONTRACT. See ASSET SPECIFICITY. See also OPPORTUNITY COST, BARRIERS TO EXIT.

References in periodicals archive ?
In another match, Rizwan Sadiq too came up with an aggressive unbeaten knock, scoring 80 runs from just 45 balls to steer Hologram past Cost Cutters Club by seven wickets.
Release of Bank Guarantee and Past Cost Reimbursement The Company would
Based on the past cost of the 10 other e-commerce zones, legislative staff has estimated that adding three more zones would cost the state only an extra $50,000 a year in lost taxes.
Assume that the entrepreneur bought the machine for 100 units--100 units represent past cost.
Few in Myanmar can currently afford mobile phones and SIM card fees, which in the past cost about $200, although the government is now trying to make prices more affordable.
Analysis of the survey data shows that business executives are moving past cost savings as a final goal for operating in the cloud.
According to KPMG's analysis of the survey data, business executives are moving past cost savings as a final goal for operating in the Cloud.
What went on in the past cost players new contracts and bonus money.
GRAHAM HENRY wishes Warren Gatland's Wales were meeting his New Zealand team in Sunday's World Cup final but argues age-old mistakes from the past cost them a place in the Auckland showpiece.
We at Navy have faced and overcome the program's past cost and schedule challenges," Secretary of the Navy Ray Mabus wrote in his response letter to Hunter.
Nippon Oil would have to raise gasoline prices about 3 yen per liter and kerosene and diesel oil prices about 1 yen if it is to make up for the past cost rises, the observers say.