A. A sunk cost is one that has already been incurred and therefore is not a relevant cost. Sunk costs are not taken into account in the decision making process because the money has already been spent, and those costs will not be changed by one decision or another.
B. A discretionary cost is a cost that is not a committed cost. It can be increased or decreased at the discretion of the decision maker. Advertising, employee training, preventive maintenance, and research and development are examples of discretionary costs.
C. Full absorption costing is a form of costing that includes both variable and fixed production costs in product costs that follow inventory and are expensed as cost of goods sold only when the inventory is sold.
D. An under allocated indirect cost is a cost that has not yet been allocated to production, although it is a cost of production.
