Case 12-30 (90 minutes)
1. The original cost of the facilities at Clayton is a sunk cost and should be
ignored in any decision. The decision being considered here is whether to
continue operations at Clayton. The only relevant costs are the future
facility costs that would be affected by this decision. If the facility were
sum, closing down the Clayton facility would almost certainly lead to a
decline in BSC’s profits.
Even though closing down the Clayton facility would result in a decline
in overall company profits, it would result in an improved performance
