without exchanging cash. This could include a small business owner not taking any salary in the beginning of their tenure as a way for the business to be more profitable. As implicit costs are the result of assets, they are also not recorded for the use of accounting purposes because they do not represent any monetary losses or gains. In terms of factors of production, implicit opportunity costs allow for depreciation of goods, materials and equipment that ensure the operations of a company. Examples of implicit costs regarding production are mainly resources contributed by a business owner which includes: Human labour Infrastructure Time Scenarios are as follows: If a person leaves work for an hour to spend $200 on office supplies, and has an hourly rate of $25, then the implicit costs for the individual equates to the $25 that he/she could have earned instead. If a printer of a company malfunctions, the implicit cost equates to the total production time that could have been utilized if the machine did not break down. Excluded from opportunity cost Sunk costs Sunk costs (also referred to as historical costs) are costs that have been incurred already and cannot be recovered. As sunk costs have already been incurred, they remain unchanged and should not influence present or future actions or decisions regarding benefits and costs. Decision makers who recognise the insignificance of sunk costs then understand that the "consequences of choices cannot influence choice itself". From the traceability source of costs, sunk costs can be direct costs or indirect costs. If the sunk cost can be summarized as a single component, it is a direct cost; if it is caused by several products or departments, it is an indirect cost. Analyzing from the composition of costs, sunk costs can be either fixed costs or variable costs. When a company abandons a certain component or stops processing a certain product, the sunk cost usually includes fixed costs such as rent for equipment and wages, but it also includes variable costs due to changes in time or materials. Usually, fixed costs are more likely to constitute sunk costs. Generally speaking, the stronger the liquidity, versatility, and compatibility of the asset, the less its sunk cost will be. A scenario is given below: A company used $5,000 for marketing and advertising on its music streaming service to increase exposure to the target market and potential consumers.