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 ?
He went on to say that the crucial situation in the past cost many lives as target killing cases were habitual occurrences which played a vital role in damaging peace and creating chaos and a dreadful situation in the city.
The apex bank also said that commercial banks' provisioning levels fell from the same period a year ago after local lenders booked the costs of a court ruling forcing them to repay some past cost hikes to retail borrowers.
The past cost method provides that the COBRA premium, or cost of coverage, can be determined based on the cost to the plan for similarly situated beneficiaries during a preceding determination period, adjusted for inflation.
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.
The IRS is thinking about requiring a plan that picks a COBRA premium determination method to stick with that method for at least five years in typical situations, and to require a plan to use the actuarial basis method for two years if there is a significant problem with using the past cost method.
While a port expansion effort pursued by the Municipality of Anchorage in years past cost hundreds of millions of dollars and culminated in a lawsuit against several of the engineering firms associated with the project, Ribuffo says the port is now moving in a new direction.
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.
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.