Which term describes actions taken to avoid having to pay some sort of cost?

Which term describes actions taken to avoid having to pay some sort of cost?

• A. Cost Reduction
• B. Cost Avoidance
• C. Cost Containment
• D. Cost Shifting

Answer: (B)

Cost avoidance is about taking actions that prevent a future cost from being incurred. It captures the idea of stopping a cost from ever arising rather than reducing amounts you’re already spending. For example, renegotiating a contract to lock in current prices so price increases are avoided, or redesigning a process to remove a costly step so ongoing expenses don’t grow. This differs from cost reduction (which lowers existing spending), cost containment (which limits spending growth within a period), and cost shifting (which moves costs to another area or time). The essence is the prevent-at-all-costs approach—avoiding the cost in the first place.

Cost avoidance is about taking actions that prevent a future cost from being incurred. It captures the idea of stopping a cost from ever arising rather than reducing amounts you’re already spending. For example, renegotiating a contract to lock in current prices so price increases are avoided, or redesigning a process to remove a costly step so ongoing expenses don’t grow. This differs from cost reduction (which lowers existing spending), cost containment (which limits spending growth within a period), and cost shifting (which moves costs to another area or time). The essence is the prevent-at-all-costs approach—avoiding the cost in the first place.