Question

Which of the following are synonyms for avoidable cost?

a.) Irrelevant Cost b.) Sunk Cost
c.) Incremental Cost
d.) Differential Cost

Answer 1

The correct synonym for avoidable cost is incremental cost. Other options mentioned are irrelevant cost, sunk cost, and differential cost.

Step-by-step explanation:

The correct synonym for avoidable cost is incremental cost. Incremental cost refers to the additional cost incurred by producing one more unit of a good or service. It is important to note that avoidable costs can be avoided if a certain action is taken, such as not producing a particular product or stopping an activity.

On the other hand, the other options mentioned are not synonyms for avoidable cost:

• Irrelevant cost refers to costs that do not have any impact on decision-making because they will be incurred regardless of the decision made.
• Sunk cost is a cost that has already been incurred and cannot be recovered. These costs are not avoidable because they are already in the past.
• Differential cost refers to the difference in cost between two alternatives.