Ethanol, a biofuel derived from corn, is used in the production of both gasoline and pharmaceutical-grade hand sanitizer. During the pandemic, as the demand for gasoline plummeted, several producers of ethanol retrofitted their plants by purchasing new capital in order to produce a higher-quality ethanol, which could be used to make a medical-grade hand sanitizer. Future decisions about whether to produce ethanol for gasoline or for hand sanitizer would not be informed by the sunk costs they incurred to retrofit their plant.
An unrecoverable expense that has already been made is referred to as a sunk cost. Sunk costs are a manifestation of the business principle that you must "spend money to make money." Sunk costs are distinct from potential expenses that a company may incur in the future, such as choices on the price of products or the cost of purchasing inventories. Sunk costs are not considered in future business decisions since they will not change regardless of the outcome. An unrecoverable expense that has already been made is referred to as a sunk cost. Sunk costs, for instance, might include the price of machinery and equipment as well as the cost of the factory's lease for a manufacturing company.
To learn more about sunk costs here,
https://brainly.com/question/14481405
#SPJ1
