Chang Industries has 2,100 defective units of product that already cost $16 each to produce. A salvage company will purchase the defective units as is for $6 each. Chang's production manager reports that the defects can be corrected for $8 per unit, enabling them to be sold at their regular market price of $22. The $16 per unit is a:

Multiple Choice

• Out-of-pocket cost.

• Incremental cost.

• Opportunity cost.

• Period cost.

• Sunk cost.