What are Sunk Costs?
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What are Sunk Costs?

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What are Sunk Costs?

Sunk costs are expended costs. At a point during the project, sunk costs represent all the money that has been spent till now on the project.
For example, if there spend $ 100000 till now on the project, this is a sunk cost.
Sunk costs are not considered when deciding whether to continue a troubled project because that is the money that has been spent already.
For example, the project might spend $ 200000 while is planned to spend $ 100000 for the work it has accomplished till now, this is a big variance. Senior management of the company might evaluate to terminate this project due to this cost variance but when considering termination $ 200000 spend already might not be taken into account because it is one already. If the future work start from now will bring benefits to the company, the project can be continuo respectively.

Sunk costs are expended costs. At a point during the project, sunk costs represent all the money that has been spent till now on the project.
For example, if there spend $ 100000 till now on the project, this is a sunk cost.
Sunk costs are not considered when deciding whether to continue a troubled project because that is the money that has been spent already.
For example, the project might spend $ 200000 while is planned to spend $ 100000 for the work it has accomplished till now, this is a big variance. Senior management of the company might evaluate to terminate this project due to this cost variance but when considering termination $ 200000 spend already might not be taken into account because it is one already. If the future work start from now will bring benefits to the company, the project can be continuo respectively.
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