Which statement regarding fixed costs is TRUE?
A) Discretionary fixed costs preserve management's flexibility.
B) Committed fixed costs preserve management's flexibility.
C) Both discretionary and committed fixed costs preserve management's flexibility.
D) Discretionary fixed costs limit management's flexibility.

Question

Quizplus · Accepted Answer

Discretionary fixed costs are those that are more controllable by management, such as advertising or employee training. They can be adjusted based on the company's needs and therefore provide management with more flexibility. Committed fixed costs, on the other hand, are more difficult to adjust, such as rent or long-term leases.

Which Statement Regarding Fixed Costs Is TRUE