What is a skunk cost?

Sunk costs are costs that have been incurred already as capital investment on land, plant and machinery, utilities,etc and initial outlay on facilities and manpower. These costs cannot be recovered unless the these facilities are used for production by using raw materials, labour etc and the sales revenue is higher than the direct, variable costs of production.What is a skunk cost?
fixed costsWhat is a skunk cost?
Gonna guess you mean a sunk cost (not skunk!).





A sunk cost is a cost for a business that you can't get back in a reasonable amount of time (also called a fixed cost).





Think of things like buildings, or large pieces of machinery or other major purchases. These are all things you could sell eventually if you were shutting down or changing your business significantly, but in day to day operations, you wouldn't be adjusting them.





The other side of sunk costs are variable costs. Those are things like your workers, or the materials to make your product. You can hire and fire people pretty easily, as well as buy more or less of whatever you use to make your product if you need to make more or less.