What is the avoided cost in his proposal?

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

View Answer

Answer: A