Avoidable cost
An avoidable cost can be eliminated by selecting a particular alternative, such as discontinuing a product or closing a facility. It is relevant to that comparison when the saving is genuinely obtainable over the decision horizon. Avoidability differs from cost behaviour: some fixed costs can be avoided, while an allocated share of common fixed cost may remain. Include transition, cancellation and restart effects where they differ between options.
Worked example
Closing a service line removes its $20,000 supervisor post but leaves a $10,000 allocated head-office cost unchanged. Only the $20,000 is an identified saving before other consequences.
Common mistake
Do not treat every charge shown in a segment report as a cash saving from closure.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |