|
|
Machine A
|
Machine B
|
Incremental Cost (B - A)
|
|
Purchase price
|
$25,000
|
$28,000
|
$3,000
|
|
Cash Operating costs
|
5,000
|
4,000
|
(500)
|
|
Depreciation of old equip
|
1,500
|
1,500
|
0
|
The incremental costs are purchase price ($3,000) and cash operating costs ($500). Here is a question for you based on the information in the table. What are the sunk costs, if any, in this situation?
