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DefinitionEdit

Means that these costs, under consideration, have nothing to do with decision making; A.K.A.: Fixed costs

ExampleEdit

The cost of the copy machine is a sunk cost. The paper and the ink are Variable Costs. If I am running a copy business and I am currently covering the costs of ink and paper (assuming the copier's monthly lease is paid for) then I will not quit producing just because I am not making enough to pay back the copier. Next month the copier may become a variable cost, but for this month it does not enter consideration (I opperate to minimize losses -- similar to profit maximization).

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