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What are sunk costs?

Management Control

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When a manager makes a decision, they seek to evaluate the financial impact of that decision. The relevant cost to be calculated includes only the variation in expenses resulting from that choice.
Expenses that have already been incurred, and that will exist regardless of the decision made, should not be taken into account. These expenses correspond to sunk costs.

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Keywords

Costs, décision, Relevance

Author(s)

TAHAR Caroline

Associate Professor

iaelyon

Institution(s)

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