Chapter 11, Problem 11.5P

a)

Summary Introduction

To explain: The costs would be treated as sunk cost or an opportunity cost.

Introduction:

Sunk cost:

Cost which has been incurred and cannot be removed. These are costs that are excluded from the future business decisions.

Opportunity cost:

It is the cost missed by an individual, investor or a firm when they select an alternative over the another.

b)

Summary Introduction

To explain: The costs would be treated as sunk cost or an opportunity cost.

Introduction:

Sunk cost:

Cost which has been incurred and cannot be removed. These are costs that are excluded from the future business decisions.

Opportunity cost:

It is the cost missed by an individual, investor or a firm when they select an alternative over the another.

c)

Summary Introduction

To explain: The costs would be treated as sunk cost or an opportunity cost.

Introduction:

Sunk cost:

Cost which has been incurred and cannot be removed. These are costs that are excluded from the future business decisions.

Opportunity cost:

It is the cost missed by an individual, investor or a firm when they select an alternative over the another.

d)

Summary Introduction

To explain: The costs would be treated as sunk cost or an opportunity cost.

Introduction:

Sunk cost:

Cost which has been incurred and cannot be removed. These are costs that are excluded from the future business decisions.

Opportunity cost:

It is the cost missed by an individual, investor or a firm when they select an alternative over the another.

e)

Summary Introduction

To explain: The costs would be treated as sunk cost or an opportunity cost.

Introduction:

Sunk cost:

Cost which has been incurred and cannot be removed. These are costs that are excluded from the future business decisions.

Opportunity cost:

It is the cost missed by an individual, investor or a firm when they select an alternative over the another.