Which of the following is an example of a discretionary fixed cost?
A)the cost of a donation to the United Way
B)the cost of the manufacturing facilities
C)the cost of the manufacturing equipment
D)taxes on the property used for manufacturing

Question

Quizplus · Accepted Answer

A discretionary fixed cost is a cost that cannot be traced directly to a specific product or service, and it can be easily adjusted or avoided altogether. The cost of a donation to the United Way fits this definition as it is not directly related to the production of goods or services and it can be adjusted or avoided at the discretion of the company. Choices B, C, and D are not discretionary fixed costs as they are all fixed costs that are directly related to the production of goods or services and cannot be easily adjusted or avoided.

Which of the Following Is an Example of a Discretionary