Definition of Sunk Cost

In economics and business decision making, sunk cost are irrecoverable costs that have already gone incurred and are independent of any happenings in the future.

Explanation

A company spends $10,000 to train its sales and staff in the use of new tablet computers. Which they will use to take customer orders. The computers prove to be unreliable, and the sales manager wants to discontinue their use. Sunk expense is a preparation, and so should not occur appraised in any decision regarding the computers.