Avoidable Cost
Accounting glossary · Understand, connect, apply
An avoidable cost can be eliminated by choosing a particular alternative, such as closing a department or discontinuing a product. Avoidability depends on contracts, resources and the decision period.
Example
Stopping a product saves 6,000 of materials and cancels a dedicated 1,000 monthly support contract. An allocated 2,000 head-office charge continues, so it is not a saving.
Remember the difference
Check whether a resource is actually released or merely reassigned. Include closure and termination costs before concluding that discontinuing an activity improves the result.
Browse the accounting glossary → · Follow a learning path
Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary