Suppose that it costs BCCC $5 per ounce to transport the gold from Isolated to Notso. They have free capacity on the line. It costs SGC $10 per ounce in shipping from Notso to their overseas buyers. It will cost SGC $1 million to make the mine operational and $100 to extract each ounce of gold.

With the above paragraph do we need to consider the $1 Million as sunk cost?

Answer rating: 100% (QA)

Whether the 1 million cost to make the mine operational is a sunk cost for SGC depends on the contex... View the full answer