EXERCISE 2-7 (15 MINUTES) ITEM DIFFERENTIAL COST OPPORTUNITY COST SUNK...

8. Cost of electricity to run the X-

ray machines ... X

Note: The costs of the salaries of the head of the Radiology Department

and Pediatrics Department and the rent on the space occupied by Radiol-

ogy are neither differential costs, nor opportunity costs, nor sunk costs.

These are costs that do not differ between the alternatives and are there-

fore irrelevant in the decision, but they are not sunk costs since they occur

in the future.