An example of a discretionary fixed cost is:
A) insurance.
B) taxes on real estate.
C) management development programs.
D) depreciation of buildings and equipment.

Question

Quizplus · Accepted Answer

Discretionary fixed costs are expenses that a company chooses to incur, rather than being required to do so by external factors. Management development programs are not necessary for day-to-day operations and are therefore considered a discretionary fixed cost. Insurance (A) and taxes on real estate (B) are both fixed costs, but they are not discretionary as they are required by law or contractual obligation. Depreciation of buildings and equipment (D) is also a fixed cost, but it is not discretionary as it reflects the gradual wear and tear of assets over time.

An Example of a Discretionary Fixed Cost Is