Which of the following is an example of sunk costs? A) wages to security staffs

Which of the following is an example of sunk costs?

A) wages to security staffs

B) cost of purchasing raw materials

C) cost of an alternative investment

D) wages payable to skilled laborers to make a product

Answer: C) cost of an alternative investment

Sunk costs are costs that have already been made earlier and cannot be reclaimed irrespective of any decision that may be taken in the future. Out of the given options, the value of an alternative investment is a sunk cost, as every cost incurred in the past, regardless of the further fate of the associated investment option, is termed as a sunk cost. Choices A, B and D mean the items which becoming recurrent or future expenses that a firm can face during its normal operational activities and therefore they cannot be treated as sunk costs. Sunk costs are relevant to these cases. After all, they should not influence decisions in the future because they are necessary costs that cannot be recovered.