The answer is sunk cost .
Sunk costs are costs that are incurred and are not refundable. Before the issue, sunk costs are included in the opportunity costs section and are not relevant for future decision making. This term originates from the oil industry where the decision to stop or continue operating an oil well is made based on expected cash flow and not based on a lot of money spent on drilling it. This is usually referred to as embedded costs, previous year's costs, stranded costs, or sunk costs.
According to the dictionary, the sunk costs are costs incurred in the past that will not be affected by current decision making. In the accounting world, sunk costs are defined as costs that have been incurred and generally cannot be changed.
Sunk costs are related to fixed costs so to calculate sunk costs you can use the fixed cost formula, which is as follows:
Fixed costs = sunk costs + fixed costs that can be avoided
If seen from the formulation of fixed costs consisting of sunk costs and fixed costs that can be avoided. Fixed costs that can be avoided are fixed costs components that can be avoided, but sunk costs are components of fixed costs that cannot be avoided.
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Details
Class: High School
Subject: Business
Keywords: Past costs are not affected by new decisions.
