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Question
"The cost of sugarcane is an avoidable cost." Justify for or against.
Answer in Brief
Solution
- If sugarcane is a direct input for sugar production, the cost is directly proportional to the output.
- When production ceases, the cost of sugarcane can be avoided.
- Avoidable costs are those that can be avoided by refraining from carrying out a specific activity or choice.
- Purchasing sugarcane is unnecessary when shutting down sugar production; hence, the cost can be avoided.
- This makes sugarcane costs preventable because they may be managed by deciding whether or not to manufacture sugar.
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Controllable and Uncontrollable Costs
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