Barnes Corp. has some obsolete inventory that was purchased for $10,000 a few years ago. Barnes believes it can probably sell the inventory as is for $5,000 or can spend $8,000 to upgrade it. The upgraded inventory would likely sell for $20,000.

When making a decision whether to sell the inventory as-is or upgrade it, the sunk cost in this scenario is:

Multiple Choice

• the $10,000 paid for the inventory a few years ago.

• the $20,000 selling price of the upgraded inventory.

• the $5,000 the inventory could be sold for as-is.

• the $8,000 that would have to be spent to upgrade the inventory.