sunk costs

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Sunk costs

Costs that have been incurred and cannot be reversed.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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Environmental Protection Agency said Monday that per a finalized consent decree with the company to remove lead and arsenic contaminated soil and sediment, Sherwin-Williams will also pay nearly $1.5 million toward reimbursing the EPA's past costs related to the United States Avenue Burn Superfund site, and two additional superfund sites in the state where the company is also performing clean-up work.
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They also agreed to collectively reimburse EPA more than $600,000 for past costs incurred.
Total will pay an overall consideration to Tullow of USD900m, representing a reimbursement of a portion of past costs, payable in instalments along the development of the project, with an initial payment of USD100m at closing.
The state Department of Environment Quality is also contributing a total of $410,000 to the cleanup project, including past costs, using funds it received from a 2014 settlement with the dry cleaners' insurer.
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Where Dyster can mislead with statistics is when he compares savings not with past costs, but with "what would have been costs."