Question

Create a business decision based on the company where you work, a small business you hope to own someday or just make something up - then identify, define and explain an incremental cost, opportunity cost and sunk cost. You will need to be somewhat creative in your response.

Respond to this question with 5-7 meaningful sentences (or more - this one could be more!). Be sure you answer the question in the context of material in chapter 6. If you use outside references, please cite them.

Answer 1

Answer:

Incremental can be clarified as the change in total expense because of a specific decision. Incremental income can be defined as the change in all out income resulting because of a specific decision.

According to the Incremental standard: A choice can be viewed as gainful one if there is an expansion in income as opposed to cost . Yet, Sunk expense is the expense , which has just been brought about and can't be recovered . For instance , if lease is paid once , that cash can't be recovered . What's more, it very well may be considered as Sunk . Opportunity Cost is the expense of next best option renounced . ie when an individual chooses to build a house on his property , the opportunity door cost is the expense of building a processing plant on that land .