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What are the differences between avoidable costs and non avoidable costs?

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Question added by Deleted user
Date Posted: 2013/06/29

An avoidable cost is a cost that you can eliminate by not engaging in or no longer performing an activity.
For example, if you choose to close a production line, then the cost of the building in which it is housed is now an avoidable cost, because you can sell it.| Over the long term, all costs are avoidable.
For example, a30-year lease is avoidable if your decision-making period is more than30 years.
In the short term, legally-mandated or government-mandated costs, such as leases or environmental cleanup obligations, are not avoidable costs.
In general, a variable cost is considered to be an avoidable cost, while a fixed cost is not considered to be an avoidable cost.
In the very short term, many costs are considered to be fixed and therefore unavoidable.
From a risk management perspective, it is useful to periodically review the cost structure of a business and try to shift as many costs as possible from the unavoidable to the avoidable category, which gives management greater room to maneuver if the business suffers a revenue shortfall and must cut back on its expenses.
For example, a lease can be renewed with a shorter term, so that management has the option to cancel the related expense within a shorter period of time than had previously been the case.
An avoidable cost is also called an es-capable cost.
Unavoidable costs are costs which can never be avoided and will even continue even if a department or product is disposed.
Fixed costs are considered to be unavoidable costs eg- property tax costs, depreciation , rent

Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

the cost that will not be incurred if the activity is not done, but the unavoidable is a cost that happens whatever the activity is done or not

Prince Ninan
by Prince Ninan , Audit Executive , Lewis & Pecker

Non avoidable costs are those costs which will be incurred even if the factory closed.eg-factory rent.Avoidable costs will not be incurred when factory is closed, eg-Wages

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