The costs incurred that provide long-term activity capacity, usually as the result of strategic planning are called:
A) Discretionary fixed expenses
B) Committed fixed expenses
C) Mixed costs
D) Step-variable costs

Question

Quizplus · Accepted Answer

Committed fixed expenses are costs incurred as a result of long-term activity capacity planning. These costs cannot be easily adjusted in response to changes in activity level. Discretionary fixed expenses are costs incurred at the discretion of the management, while mixed costs have both fixed and variable components. Step-variable costs have a fixed component up to a certain level of activity, after which they increase in increments.

The Costs Incurred That Provide Long-Term Activity Capacity, Usually as the Result