GL Plastic Molders spent $1,200 last week repairing a machine. This week the company is trying to decide if the machine could be better utilized if they assigned it a proposed project. When analyzing the proposed project, the $1,200 should be treated as which type of cost?

A. opportunity
B. fixed
C. incremental
D. erosion
E. sunk

The correct answer of the given question would be option E. given in the answer options or sunk.

Explanation:

In Economics or Business, sunk costs are considered as the costs or expenses incurred by any firm or company that are usually non-recoverable.Sunk costs in business basically refers to the costs or expenses that are already incurred or spend by the firm or company and cannot be recovered under any circumstances.In this instance,note that GL Plastic Molders has already spent $1200 last week for repairing a machine.Hence, the $1200 signifies a business liability that has already been paid off for a particular service and cannot be refunded.Therefore,while evaluating the better utilization of the concerned cost or expense in the future,the $1200 will be treated or regarded as Sunk Cost from business or commercial standpoint as it will not regained by the company.