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

Question

Quizplus · Accepted Answer

Discretionary fixed costs are expenses that are not directly tied to production or sales and can be adjusted at the discretion of management. Management training is an example of a discretionary fixed cost because it is a planned expense that can be adjusted based on the company's budget and priorities. Insurance (A) and taxes on real estate (B) are typically considered fixed costs, but they are not discretionary because they are required expenses that cannot be adjusted by management. Depreciation of buildings and equipment (D) is a fixed cost, but it is not discretionary because it is determined by accounting rules and is not a decision that management can make.

An Example of a Discretionary Fixed Cost Is