sunk costs

(redirected from Past Costs)

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 ?
has agreed to pay for the work as described in the AOC, as well as repaying all of EPA's past costs, interim costs, and future costs.
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.
Eversource asserts claims for negligence (on the theory that Veolia did not exercise due care in operating and maintaining its system), trespass to chattels (based on allegedly wrongful releases or leaks of steam), and breach of contract (asserting that Veolia breached a December 2013 agreement to cooperate with Eversource in identifying and mitigating steam leaks and to reimburse Eversource for future and certain past costs caused by Veolia steam leaks).
'The exploration cost shot up amid two dry wells (Qamar X-01 and Roshan-01) in 1QFY19 compared to reversal of exploration expense of Rs85 million (owing to recovery of past costs) in 1QFY18,' the analyst said.
In a regulatory filing, Stanley Black & Decker confirmed that it has reached a settlement with the Environmental Protection Agency for reimbursement of EPA's past costs and remediation of environmental contamination found at the Centredale Manor Restoration Project Superfund site located in North Providence, Rhode Island.
And the way to do that is to ask yourself this: what would I do if I had not incurred any past costs in this matter?Would you watch the movie knowing what you now know, had you not paid for it?
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.
Under the terms of deal Sterling will assume a 40.5% participating interest in the PSC from Tullow, including an entitlement to a corresponding interest in all past costs; and Sterling will pay Tullow approximately USD 2.5m in consideration and repayment of past costs.
Where Dyster can mislead with statistics is when he compares savings not with past costs, but with "what would have been costs."