ICSE Class 10 Commerce 2018 Solved Papers

SECTION - I

Distinguish between :

Question : 2

Total: 31

Shut down costs and sunk costs.

Solution:

Sunk Costs	Shut Down Costs
1. Sunk costs are historical costs or past costs which have already incurred and can not be changed by any future decisions.	Shut down costs are those costs which have to be incurred even if production or operation of an undertaking are discontinued temporarily due to strike, shortage of raw materials etc.
2. Sunk costs include expenses like investment in land and machinery, building etc.	Shut down costs include fixed costs such as rent, insurance, depreciation etc.

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