What is Sunk Cost?
Definition of Sunk Cost
In economics and business decision making, sunk costs are irrecoverable costs that have already been incurred and are independent of any happenings in the future.
Explanation of Sunk Cost
A company spends $10,000 to train its sales and staff in the use of new tablet computers, which they will use to take customer orders. The computers prove to be unreliable, and the sales manager wants to discontinue their use. The training is a sunk cost, and so should not be considered in any decision regarding the computers.