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In order to achieve its goal of improved customer service, the Evergreen Health Plan will add three new customer service representatives to its existing staff, install a new switching station, and install additional phone lines. In this situation, the cost that would be classified as a sunk cost, rather than a differential cost, is the expense associated with:
Suggested Answer: B
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11 comments · newest first
LU
Luis
1 year ago
I thought all these expenses were new costs, not sunk.
VE
Vernell
1 year ago
New phone lines are definitely a differential cost.
KA
Kami
1 year ago
Wait, how is maintaining staff a sunk cost?
AL
Alba
1 year ago
Totally agree, that makes sense!
KR
Krissy
1 year ago
Maintaining the existing staff is a sunk cost.
AR
Ardella
1 year ago
I recall that sunk costs are past costs that shouldn't affect current decisions. So, I lean towards option B, maintaining the existing staff, as it’s already spent.
RA
Raymon
1 year ago
This question feels familiar. I practiced a similar one where we had to identify costs in a business decision. I think maintaining the existing staff fits the sunk cost definition.
QU
Quinn
1 year ago
I'm not entirely sure, but I remember that sunk costs are costs that can't be recovered. Maybe it's the expense of maintaining the existing staff?
LU
Luis
1 year ago
I think the sunk cost might be related to maintaining the existing staff since those expenses are already incurred.
JU
Junita
1 year ago
This seems like a pretty straightforward networking question. I'm pretty confident I can figure this out.
JE
Jeniffer
1 year ago
I'm not entirely sure about this one. I'll have to review the course material to see if I can figure it out.