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Avoided Cost Formula

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Avoided Costs refer to expenses or expenditures that a company can prevent or eliminate by taking specific actions. Check FAQs

ACS = ARC + PL - PMCT

ACS - Avoided Costs?ARC - Assumed Repair Cost?PL - Production Losses?PMCT - Preventative Maintenance Cost?

Avoided Cost Example

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Here is how the Avoided Cost equation looks like with Values.

Here is how the Avoided Cost equation looks like with Units.

Here is how the Avoided Cost equation looks like.

865 = 980 + 470 - 585

865 = 980 + 470 - 585

865 = 980 + 470 - 585

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Avoided Cost Solution

Follow our step by step solution on how to calculate Avoided Cost?

FIRST Step Consider the formula

ACS = ARC + PL - PMCT

Next Step Substitute values of Variables

∴

ACS = 980 + 470 - 585

Next Step Prepare to Evaluate

∴

ACS = 980 + 470 - 585

LAST Step Evaluate

∴

ACS = 865

Avoided Cost Formula Elements

Variables

Avoided Costs

Avoided Costs refer to expenses or expenditures that a company can prevent or eliminate by taking specific actions.

Symbol: ACS

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Avoided Costs

Assumed Repair Cost

Assumed Repair Cost is an estimated or projected expense associated with repairing or restoring an asset, equipment, or property.

Symbol: ARC

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Assumed Repair Cost

Production Losses

Production Losses refer to disruptions or reductions in the output of goods or services caused by various factors, resulting in a decrease in productivity or efficiency.

Symbol: PL

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Production Losses

Preventative Maintenance Cost

Preventative Maintenance Cost refers to the expenses associated with planned and proactive maintenance activities aimed at preventing equipment failures.

Symbol: PMCT

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Preventative Maintenance Cost

Other formulas in Cost Accounting category

Go Material Cost Variance

MCV = (SQAO \cdot STP) - (ACQ \cdot ACP)

Go Material Price Variance

MPRV = ACQ \cdot (STP - ACP)

Go Material Quantity

MQ = STP \cdot (SQ - ACQ)

Go Revised Standard Quantity

RSTQ = (\frac{SQM}{TSQ}) \cdot TAQ

How to Evaluate Avoided Cost?

Avoided Cost evaluator uses Avoided Costs = Assumed Repair Cost+Production Losses-Preventative Maintenance Cost to evaluate the Avoided Costs, Avoided Cost is a term commonly used in economics, finance, and business to describe the expenses or losses that are prevented or mitigated by taking a particular action. Avoided Costs is denoted by ACS symbol.

How to evaluate Avoided Cost using this online evaluator? To use this online evaluator for Avoided Cost, enter Assumed Repair Cost (ARC), Production Losses (PL) & Preventative Maintenance Cost (PMCT) and hit the calculate button.

FAQs on Avoided Cost

What is the formula to find Avoided Cost?

The formula of Avoided Cost is expressed as Avoided Costs = Assumed Repair Cost+Production Losses-Preventative Maintenance Cost. Here is an example- 865 = 980+470-585.

How to calculate Avoided Cost?

With Assumed Repair Cost (ARC), Production Losses (PL) & Preventative Maintenance Cost (PMCT) we can find Avoided Cost using the formula - Avoided Costs = Assumed Repair Cost+Production Losses-Preventative Maintenance Cost.

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Avoided Cost Formula

Avoided Cost Example

Avoided Cost Solution

Avoided Cost Formula Elements

Other formulas in Cost Accounting category

How to Evaluate Avoided Cost?

FAQs on Avoided Cost

Variable Name