How Do You Spell AVOIDED COST?

Pronunciation: [ɐvˈɔ͡ɪdɪd kˈɒst] (IPA)

The term "avoided cost" refers to the expense that a company could have incurred if a particular action had not been taken. The spelling of the word "avoided" can be broken down phonetically as əˈvɔɪdɪd, with the emphasis on the second syllable. The "a" sounds like the "a" in "father," the "o" sounds like the "o" in "ow," and the "i" sounds like the "i" in "bit." The word "cost" can be phonetically spelled as kɔst, with the emphasis on the first syllable. The "o" sounds like the "o" in "go," and the "s" sounds like the letter "s."

AVOIDED COST Meaning and Definition

1. Avoided cost refers to the expense that is saved or avoided by not undertaking a particular action or investment, or by choosing an alternative course of action. It is a concept often employed in economics, business, and finance, wherein it measures the potential costs that would have been incurred if a specific activity or project had been pursued but was ultimately avoided.

   In business, avoided cost can apply to various aspects. For instance, in manufacturing, it can represent the amount saved by not producing a specific product or by not utilizing certain resources. In project management, it may signify the costs that are avoided by not implementing a particular project or by opting for a less expensive alternative. In energy economics, avoided cost is often associated with the savings gained by seeking alternative and more cost-effective energy sources instead of relying on conventional, more expensive methods of power generation.

   The calculation of avoided cost involves assessing the expenses, including direct and indirect costs, that would have been incurred if a specific action had been taken. It takes into account factors such as labor costs, material costs, equipment costs, administrative costs, and any other relevant cost elements. By examining these potential costs and comparing them to the actual costs or savings incurred by avoiding the action, individuals or businesses can better understand the financial implications of their decisions and identify potential areas of savings or profitability. Avoided cost analysis can be a helpful tool for decision-making, cost management, and determining the most economically advantageous course of action.

Etymology of AVOIDED COST

The word "avoided cost" does not have a distinct etymology on its own as it is a technical term used in economics and business. However, we can break down the term to understand its components:

1. Avoided: Derived from the verb "avoid", which comes from the Middle English term "avoiden". It originated from the Old French word "esvuidier", meaning "to empty out" or "clear away".

2. Cost: Originates from the Latin word "costus", which meant "expense" or "price".

When combined, "avoided cost" refers to the expenses or costs that can be avoided by taking a certain course of action or making specific decisions in economics or business planning.