Wild Side Clothes manufactures designer jeans. At the end of the current year, one line of jeans was out of style. These jeans were carried in inventory at $50,000. Geri Wilder, a product line manager, estimates that, with a little rework costing $8,000, she could sell the entire lot to a discount clothing outlet for $15,000. Or, Geri figures, the jeans could be sold “as is” to a company in northern Mexico for $6,000, although Wild Side would have to pay $750 in freight charges. She could also sell the jeans as waste material to a recycling firm for $2,200.

Required:
1. What is the sunk cost in this situation?
2. Which is the best choice? Why?
3. Geri could store the jeans for a cost of $150 per month. She says, “I think this style will return in, oh, maybe 8 or 10 years.” She guesses that the jeans might be sold for “up to $30,000” then, assuming no storage damage and no inflation.
Does this information affect your analysis? Explain.