1 7 . A retailer purchased some trendy clothes that have gone out of style and m
ID: 2634747 • Letter: 1
Question
17.
A retailer purchased some trendy clothes that have gone out of style and must be marked down 20% of the original selling price to be sold. Which of the following is a sunk cost in this situation?
A)
The original selling price.
B)
The original purchase price.
C)
The anticipated profit.
D)
The current selling price.
17.
A retailer purchased some trendy clothes that have gone out of style and must be marked down 20% of the original selling price to be sold. Which of the following is a sunk cost in this situation?
A)
The original selling price.
B)
The original purchase price.
C)
The anticipated profit.
D)
The current selling price.
Explanation / Answer
Hi,
The correct answer is option (B), The original purchase price.
Explanation: The sunk cost is a retrospective (past) cost that has already been incurred and cannot be recovered. Here, the cost of purchasing the clothes has already been made and cannot be recovered. Hence, the original price is the sunk cost
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