Identifying unused capacity is very different for engineered costs compared to discretionary costs.

Question

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Engineered costs refer to fixed costs that are incurred regardless of the level of production or output, such as depreciation on capital assets or rent on a building. These costs cannot be adjusted based on demand or usage. On the other hand, discretionary costs are variable costs that can be adjusted based on demand or usage, such as marketing expenses or employee overtime pay. Therefore, identifying unused capacity for engineered costs is different from identifying unused capacity for discretionary costs.

Identifying Unused Capacity Is Very Different for Engineered Costs Compared