-Refer to Figure 9.5.Which area represents avoidable cost?
A) ABCDE
B) EDGF
C) EDCHF
D) CHGD

Question

-Refer to Figure 9.5.Which area represents avoidable cost?
A) ABCDE 
B) EDGF 
C) EDCHF 
D) CHGD

Quizplus · Accepted Answer

Avoidable costs are those that can be eliminated if a particular decision is made. In the context of a diagram or graph that typically represents costs in relation to business operations or decisions, the area under the cost curve that can be avoided (not incurred) by not engaging in a particular activity or by making a specific decision is considered the avoidable cost. Therefore, the area that represents the costs that would not be incurred if a certain action is avoided or a decision is made to not proceed with a particular operation is the correct answer. In this case, area EDCHF represents the avoidable cost, as it is the portion of the total costs that can be eliminated if a certain decision is made, indicating that these costs are directly related to a specific activity or decision.

-Refer to Figure 9.5.Which Area Represents Avoidable Cost