The fixed cost fallacy occurs when a

Accounting Dec 18, 2020

The fixed cost fallacy occurs when

a. A firm considers sunk costs in making decisions

b. A firm ignores relevant costs

c. A firm considers overhead or depreciation costs in making decisions

d. Both a and c

Expert Solution

The answer is D. Sunk costs are irrelevant costs. The fixed cost fallacy is when a firm considers sunk or irrelevant costs like overhead and depreciation costs in the decision making process.

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