Which type of fixed cost is normally approved for a specific management programme and can be changed more easily in the short term?
Correct answer: B. Discretionary fixed cost
- A. Committed fixed cost
- B. Discretionary fixed cost
- C. Sunk fixed cost
- D. Unavoidable fixed cost
Explanation
Discretionary fixed costs arise from current management decisions, such as advertising or staff training budgets, and may be adjusted more readily. Committed fixed costs usually result from long-term decisions and are harder to change quickly.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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