Sunk cost
Sunk cost is a past expenditure that cannot be recovered or reversed by any future decision. Because no choice can alter it, it carries no weight in rational forward-looking analysis.
Also known assunk costs
See it move
A side-by-side comparison contrasts two options: accepting a sales offer (revenue +€18,000, modification cost −€11,000, net benefit +€7,000) versus rejecting it (all figures €0). The €50,000 already spent on development does not appear in either column because it is identical under both choices and therefore irrelevant to the decision. Excluding sunk costs this way prevents past spending from distorting a current choice.
Check yourself
A company spent €200,000 developing a software product. Market research now shows the product will generate €120,000 in future revenue against €50,000 of additional costs to complete it. A manager argues the project must continue to recover the development spend. Which statement best evaluates that reasoning?