Which of the following statements is false? Overhead expenses are associated wit

Question

Which of the following statements is false? Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation. Because value is lost when a resource is used by another project, we should include the opportunity cost as an incremental cost of the project. When computing the incremental earnings of an investment decision, we should include all changes between the firms earnings with the project versus without the project. I. Sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis.

Explanation / Answer

Sunk costs are past opportunity costs that are partially as salvage or totally irretrievable and should be considered irrelevant to future decision making . This term is from the oil industry where the decision to abandon or operate an oil well is made on the basis of its expected cash flows and not on how much money was spent in drilling it . Also called embedded cost , prior year cost , stranded cost , or sunk capital

answer d sunk costs are incremental with respect to the current decision regarding the project and should be included in its analysis

Sunk costs are past opportunity costs that are partially as salvage or totally irretrievable and should be considered irrelevant to future decision making . This term is from the oil industry where the decision to abandon or operate an oil well is made on the basis of its expected cash flows and not on how much money was spent in drilling it . Also called embedded cost , prior year cost , stranded cost , or sunk capital

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