An IT department needs to upgrade its hardware to run the new version of an established operating system. The cost of this required upgrade is $2 million. As an alternative, the IT director has suggested that the company should change to a completely different operating system. Although this will cost $6 million, the change will bring many other benefits, including cheaper maintenance costs and increased security. What is the avoided cost in his proposal?
A) $2 million.
B) $4 million.
C) $6 million.
D) $8 million.

Question

Quizplus · Accepted Answer

The avoided cost is the $2 million that would have been spent on upgrading the current system.

An IT Department Needs to Upgrade Its Hardware to Run